Comhairle nan Eilean Siar

Debt Recovery and Credit Control Policy

Introduction

This policy describes the Comhairle’s approach to both collecting outstanding debts and trying to minimise the debt that arises in the first place.

We recognise that people do not pay their debts for a variety of reasons:

• Some people may deliberately set out to delay or not make payments and all methods of enforcement will be used to secure payment in these cases.

• Some people, because of living in or on the margins of poverty, will have difficulty in paying. The Comhairle will use their best endeavours to help such people and to minimise the impact of debt on them.

• Some people may be able to pay but do not pay because of an oversight or personal difficulties and not because of a deliberate decision to avoid or delay payment. The Comhairle will seek to help such people develop a culture of payment by encouraging them to get in contact and discuss any difficulties.

This policy covers the collection of Council Tax, Non-domestic Rates, and Sundry Debts (including Housing and Council Tax Benefit overpayments). In view of the forthcoming transfer of the Comhairle’s housing stock to the Hebridean Housing Partnership, this policy does not address debt issues relating to council houses.

The policy consists mainly of a statement of principles. It will be supplemented by further advice which will be issued to Comhairle staff and other agencies to assist them in advising the public on debt recovery issues.

The Policy

We have a legal duty to ensure cost-effective billing, collection, and recovery of all sums due to the Comhairle.

For the policy to be effective it is vital to ensure:

• that accurate and clear bills are produced promptly;
• that we respond quickly to changes in circumstances and applications for exemptions, discounts and reliefs;
• the fast and accurate delivery of benefit entitlements;
• that we stick to the time scales we give people when outlining enforcement action.

The purpose of the policy is to formally approve the processes and procedures which the Comhairle will use in attempting to recover money from debtors.

The Policy Aims to

• take positive action to prevent arrears occurring, for example by maximising income and providing a range of payment methods;
• take positive enforcement action against deliberate non-payers or those who delay payment;
• ensure we bill promptly and remind people quickly if they do not pay; and
• encourage people to make early contact with us to avoid build up of debt.

Statement of principles

Comhairle nan Eilean Siar

• believes that people have a responsibility to pay their debts;
• believes that where possible customers should be required to pay for services in advance or provide their bank details so that debt is avoided;
• aims to identify those who can pay but won’t or who delay payment, so that recovery action can be taken accordingly;
• actively encourages contact at every stage of the collection and recovery process;
• aims to help people maximise their income;
• acknowledges the need to provide a service that is effective but sensitive to individual’s needs; and
• acknowledges our responsibility to collect revenue effectively.

Code of Practice

We will provide clear and prompt information about bills and liabilities. The information we provide will show:

• what the bill or liability is for;
• the amount due;
• how to make payment; and
• a contact point for all enquiries.

All such correspondence will be clearly written, without the use of jargon and will contain, where appropriate, information about where to get independent advice.

The Comhairle will:

• inform people of their entitlement to benefits, discounts, reliefs and exemptions; and
• advise people where they can get independent advice with financial problems, e.g. local Money Advice services.

Credit Control

Where the Comhairle provides non-statutory services, we will seek to avoid debt arising by expecting customers to pay in advance or provide their bank details so that we can charge them by Direct Debit once they have received the service. Non-statutory services will not normally be provided to customers who are in arrears to the Comhairle in respect of any other debts and have not agreed formal repayment terms with us.

Making Payment

It is acknowledged that the easier it is to pay, the more likely it is that payment will be made.

We will provide a choice of convenient methods of payment for bills and invoices and details of these options will be advised on each bill:

• How payments are made. For example Direct Debit, cash, cheque, credit and debit cards, etc

• Where payments are made. We aim wherever possible to prevent people having to incur additional costs and having to travel solely to pay bills. As well as existing council offices, where possible we will provide facilities for customers to pay their bills in the community, e.g. at Post Offices, shops and petrol stations. We will also accept payments via the Comhairle’s web site and by telephone.

Housing Benefit overpayments will be recovered from on going benefit where possible. Council Tax Benefit overpayments will normally be added to the Council Tax account.

Whatever the method of payment individuals must ensure that payments made reach the Comhairle by the due date. The instalment dates, where appropriate are shown on each bill.

We will actively encourage people to contact us early if they are having difficulty paying and, when appropriate, advise them where to get independent money advice.

Making arrangements for people in arrears

Staff will:

• encourage contact from people at an early stage in the recovery process
• attempt to make an arrangement which will pay the arrears within a reasonable period of time and maintain payment of ongoing liabilities

It is important to remind the individual to contact the Comhairle if they anticipate problems in meeting any instalment due date. They will be advised not to wait until they have received a written response to their offer of payment, but to start and maintain payments.

On the advice of Money Advisers, debtors may set up a Trust Deed or Debt Arrangement Scheme to pay off their debts. The Comhairle will accept the terms of such arrangements if they appear likely to result in the debt being repaid within a reasonable period of time, while allowing ongoing liabilities to be met.

Both Trust Deeds and Debt Arrangement Schemes are formal legally binding agreements whereby the debtor agrees to keep to a repayment plan, while meeting ongoing liabilities. Both are diligence stoppers: this means that once the arrangements are in place the Comhairle cannot carry out diligence against a debtor in order to recover arrears outstanding.

Monitoring Payment Arrangements

• all payment arrangements will be closely monitored
• prompt recovery action will be taken in respect of missed payments
• action may be taken, even where payment is received shortly after the due date
• the responsibility for making sure that payment reaches the account by the due date remains with the individual
• where arrears are being repaid by Direct Debit, it is the responsibility of the debtor to ensure that there are sufficient funds in the nominated bank account to cover the instalment

When payment arrangements are not maintained

• it is important to ensure that where arrangements have not been maintained that prompt action is taken (by the person) to try and bring the arrangement back up to date

• although the Comhairle will ideally require the original agreement to be brought up to date within a short timescale, if there has been a significant change in circumstances it may be possible to negotiate a new arrangement.

Recovery Action

The Comhairle will use the full range of measures available to it to recover outstanding debt from those debtors we believe are able to pay. The precise nature of the recovery action will vary depending on the type of debt.

The Comhairle will proceed through the following stages of the recovery process:

• Reminders - if payment is not received within a reasonable period of the bill being issued, a number of reminders will be issued, including a final notice, advising the debtor that the Comhairle will take further legal action if payment is not received within a given period. In the case of Council Tax and Non-domestic Rates, there is a statutory framework covering recovery action, and the Comhairle will apply to the court for a Summary Warrant, which provides legal recognition of a debt and permits further diligence action to be taken (and also adds 10% costs to the value of the debt).

• Referral to Debt Recovery team - where bills remain unpaid the Comhairle’s Debt Recovery team will make further efforts to contact the debtor and agree repayment terms. If the Debt Recovery Team is unable to recover the debt, they will normally refer the case to the Comhairle’s Sheriff Officers or the Comhairle’s in house legal team, who will make further attempts to recover the debt before resorting to legal action.

• Legal Action – there are a number of types of diligence which may be used to recover outstanding debts. In some cases it will be necessary for the Comhairle’s legal section to raise a court action before further diligence can be carried out. Where diligence is appropriate, Sheriff Officers are likely to seek an arrestment. These are of two types:

• Earnings arrestment – where it is known that a debtor is working, an earnings arrestment may be enforced, whereby deductions are made from the debtor’s wages or salary in order to repay the debt.

• Bank arrestment – where details of a debtor’s bank account are known, a bank arrestment may be enforced, whereby the bank account is frozen and any money in it may be used to pay off the debt.

Where arrestments are unsuccessful, and in exceptional circumstances, our Sheriff Officers may resort to a number of other types of diligence. These measures will only be taken in cases where it is believed that the debtor has assets which may be used to pay off the debt:

• Attachment Order – this allows property belonging to a debtor to be seized and sold to pay off the debt. Such property must be owned by the debtor but held outside the living area of their home.

• Exceptional Attachment Order – this allows the attachment of goods inside the home of a debtor. It may only be used in exceptional circumstances, on application to the Sheriff Court, after all other recovery procedures have failed, and only affects ‘non-essential’ goods.

• Sequestration (bankruptcy) – this means that the debtor is declared bankrupt and their assets may be used to pay off their debts.

In many cases the threat of this type of legal action will be sufficient to induce the debtor to pay off the debt or make a realistic offer regarding repayment terms.

Write-off of outstanding debts

Where it appears that a debt is irrecoverable we may write it off. Debts will only be written off under the following circumstances:

• The debt is for a trivial amount and it would not be cost-effective to pursue it;
• The debtor has been sequestrated and there are insufficient assets to pay off the debt;
• The debtor has died, and there are insufficient assets in the estate to pay off the debt;
• The debtor has moved away and we are unable to trace them.

Debts up the value of £2,000 may be written off at the discretion of the Director of Finance. Write-offs over £2,000 will require the approval of the Comhairle on the recommendation of the Policy and Resources Committee.