Corporate Debt Recovery Policy
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Introduction
Pembrokeshire County Council has both a legal duty and responsibility to all residents, businesses and other organisations that are active in the County, to ensure prompt and cost effective billing, collection and recovery of all sums due to the Council.
It is essential that all monies due are collected effectively by the Council and that debts owed are kept to a minimum. Any delays in collection or non-recovery of debts ultimately leads to additional financial pressures on the Council’s budget and cashflow and can inevitably affect future service delivery.
The Corporate Debt Recovery Policy will introduce a consistent, equitable, transparent and timely approach to debt management throughout the Authority, which will ensure that all actions taken are reasonable, proportionate, lawful and appropriate.
Where a person or organisation makes contact to discuss payment difficulties, either directly or via the Debt Respite Scheme (Breathing Space), their circumstances will be considered fairly and objectively with a view to agreeing a reasonable payment arrangement, minimising recovery action and avoiding potential additional costs. Where people or organisations fail to make contact or maintain their payment obligations, recovery action will continue in the wider public interest.
This Policy sets out the general principles to be applied in relation to the management of debt across all services provided by the Council.
Overview
Scope of the policy
This policy applies to the collection of:
- Council Tax
- National Non-Domestic Rates (Business rates)
- Housing rents
- Garage rents
- Housing Benefits and Council Tax Benefit overpayments
- Sundry Debtors
- Social Care [Residential and Non-residential]
There are specific rules and regulations which govern the recovery and collection of these debt types which are set out in the respective Appendices.
The Policy may be extended to include other forms of revenue collected by the Council. Whilst the Council will use its best endeavours to adhere to the Policy, there may be occasions when it is impractical or unreasonable to do so. Non-compliance with the policy does not in itself negate any debt recovery action taken or render it unenforceable.
Guiding principles of the policy
The Council is committed to treating people fairly in ensuring a professional and timely approach to collecting money due to it and must do so responsibly, sensitively and effectively. The Council will ensure:
- Any recovery action will be proportionate
Proportionality allows for a balanced view between the potential loss of income to the Council and the costs of compliance.
- The approach taken will be consistent
Consistency means taking a similar approach in similar circumstances to achieve the same objectives. The Council will provide consistency with the advice given, in the use of its statutory powers and the recovery procedures used. Consistency should not be construed as uniformity as the Council recognises the need to consider many variables in each case such as the social circumstances of the debtor, the payment history, their ability to pay and whether they could be considered to be vulnerable.
- The actions will be transparent
Transparency is important in maintaining public confidence in the Council. The Council will explain to debtors what is expected of them and what they should expect from the Council. Following a request, we will also provide an explanation as to the reason for instigating any recovery action and the next steps that the Council may take if payment is not made.
Policy aims and objectives
The key policy aims and objectives are to:
- Ensure that invoices/demands are issued accurately and promptly, taking into consideration the application of any statutory relief where applied for by the debtor and offset against the liability.
- The Council will offer efficient and flexible payment methods where permitted, ensuring all demands for payment clearly identify all the payment options available.
- Inform people of their entitlement to discounts and exemptions to ensure maximum take-up.
- Take recovery action against deliberate non-payers or those who delay payment without genuine reason while working to identify and assist those who prove genuine financial hardship.
- Where people have fallen or are likely to fall into arrears, a commitment to work with them and their representatives to set reasonable and realistic payment levels that they can maintain, ensuring that payment arrangements reflect the ability to pay as well as the level of debt owed.
- Informing customers that once an agreement has been made no further action will be taken unless the arrangement is broken. Subject to periodic review of circumstances.
- Work towards a co-ordinated approach with multiple debts owed to the Council.
- Comply in full with the Debt Respite Scheme (Breathing Space) which gives those with problem debt the right to legal protections from their creditors.
Debt recovery
Recovery process
The Council will establish timely and vigorous processes for the recovery of overdue sums and will start to recover unpaid debt promptly when a payment becomes overdue or an instalment plan or payment arrangement is not maintained. The Council will be stringent in recovering overdue amounts from persistent non-payers and late-payers.
In pursuing the payment of overdue sums the Council may utilise any and all of the methods available to it in law. The recovery processes for some specific Council debts are laid down by law. The specific processes are outlined at Appendices 7.1 to 7.7*.
*NB If a debt is in a Breathing Space, under the Debt Respite Scheme (See 3.7), the stated recovery actions will be put on hold until the Breathing Space period has ended (other than where a legal exemption applies).
Enforcement action
The Council will follow all statutory legislation to enforce repayment of the debt and where necessary, it will use enforcement agents.
Range of recovery methods
A range of recovery options will be used where the customer has failed to make payment following demand or arrangements to pay have broken down. The choice of method would depend on a number of factors including what is available for a particular type of debt, but options can include:
- Liability Order (an order made by the Magistrates Court which gives the Council power to take further action to enforce payment).
- Attachment of Earnings Order.
- Deductions from Benefit.
- Enforcement agency/Debt Collection action.
- Insolvency (bankruptcy) action.
- Securing the debt by obtaining charging order against assets.
- Enforced sale of assets/ Possession proceedings.
- Third Party Debt Order.
- Voluntary deductions through salary.
- Enforcement agent and debt collection agencies.
- Repossession of a property.
Evasion and fraud
The unlawful evasion of payments due to the Council reduces the financial resources available to the Council and has a direct impact on all residents, businesses and other organisations that rely on Council services. Unlawful evasion or fraud to avoid payment will not be tolerated and where this is identified, in addition to taking action to enforce payment, the Council will seek to impose such further penalties or sanctions as the law allows.
Where debts arise through evasion or fraud, the Council will seek to recover payment in full as quickly as possible.
Vulnerable people
The Council recognises that some members of the community may be considered to be more vulnerable and therefore may require additional support in dealing with their financial affairs.
Vulnerability does not mean that a person will not be required to pay amounts they are legally obliged to pay. However, where a person is recognised to be vulnerable, consideration should be given to:
- Allowing longer to pay.
- Postponing enforcement action.
- Referring the person to sources of independent advice, eg. Citizens Advice Bureau (CAB).
- Providing information in an accessible format.
- A temporary payment arrangement with lower repayment than would normally be agreed.
The cause of vulnerability or social exclusion may be temporary or permanent in nature and the degree of vulnerability will vary widely. Generally, a person is considered to be vulnerable if it would be unreasonable to expect them to be able to deal with a problem themselves. Care will be taken to assess each situation on a case by case basis. The Authority will support in securing an appointeeship or deputyship to manage their finances.
Tracing people
The Council will make all necessary attempts to trace any debtors to ensure that outstanding payments are recovered. This will include checking internal and external sources of information and sharing information with other Authorities where necessary, ensuring compliance with the Council’s Data Protection Policy and Data Protection Legislation. Tracing Agents will be used if the Council feels appropriate.
Debt respite scheme (breathing space)
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, came into effect on 4 May 2021 and gives those with problem debt the right to legal protections from their creditors.
There are two types of breathing space: a standard breathing space and a mental health crisis breathing space.
- A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
- A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person's mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
As a creditor, if the Council is told that a debt owed to it is in a breathing space, it must stop all action related to that debt and apply the protections. These protections must stay in place until the breathing space ends.
An electronic service (set up by the Government Insolvency Service) will send a notification to tell the Council about each debt owed to it in a breathing space and the date the breathing space started. The Council needs to make sure it applies the protections to these debts from the date set out in the notification. (NB. All Breathing Space notifications must be received direct from the Insolvency Service before they are applied).
The Council has also put in place an internal process to ensure all breathing space notifications are promptly actioned by the relevant departments on receipt, with full details of all requests also recorded on a single case management system.
Full information on the Authority’s responsibilities under the Debt Respite Scheme (Breathing Space) (opens in a new tab)
Methods of payment
The methods of payment offered are:
- Direct Debit: Direct Debit is offered for payment of Council Tax, NNDR and other Sundry Debts where periodic receipts are due.
- On-Line via the Council’s Website: Council Tax, Housing Benefit Overpayments and Sundry Debts may be paid by debit and credit card through the Council’s website by visiting www.pembrokeshire.gov.uk/myaccount to register or login
- 24 hour Automated Telephone payment line: NNDR, Council Tax, Housing Rents, Housing Benefit Overpayments and Sundry Debts may be paid by debit or credit card by telephoning 01437 775164
- Post Offices: Council Tax, and Housing Rent can be paid free of charge at any Post Office
- Customer Service Centre: payment by cash, cheque or card can be made at any of the centres or over the telephone on 01437 764551
- Bank Transfer / BACS / Standing Order: Payment of Council Tax, NNDR, Housing Benefit Overpayments and Sundry Debts may be made directly to the Council’s bank account, details of which are provided upon request.
Additional payment methods may be offered in the future where it is economically viable to do so.
Where payment can be taken before a service is provided this should be the primary method of collection.
Where recurring payment is required, Direct Debit should be the primary method of collection and be set up when agreements are signed.
Debtors may be required to provide details of a guarantor for certain service agreements.
Full contact details including email address and telephone number should be provided for all new / recurring debts to assist recovery.
Suspension/Termination of recovery
Where a debt is irrecoverable, prompt and regular write offs of such debt is important so that the Council can budget for bad debts. An integral part of debt recovery is the effective management of bad debts to ensure that resources are applied efficiently to the collection of monies outstanding which can reasonably be expected to collect. Each case will be considered on its individual merits and the following comments provide examples of cases where it may be appropriate to consider suspension/termination of proceedings:-
- The debt is uneconomical to pursue.
- All appropriate recovery methods have been exhausted.
- The amount is uncollectible due to bankruptcy or insolvency after submission (where appropriate) to the liquidator/insolvency practitioner.
- The debtor has absconded and cannot be traced.
- It is not in the public interests of the Council to pursue the debt.
- The debtor is not resident in the United Kingdom.
- The age of the debt precludes recovery, or the debt is Statute Barred.
- The debtor is deceased and the estate does not have sufficient funds available for either part or full payment.
- The debt is in a Breathing Space.
N.B. the above list is not exhaustive
Recovery action will recommence if the debtor is traced or their circumstances change sufficiently to make this action reasonable.
The write-off of all debt requires the approval of the Director of Resources.
Miscellaneous
Complaints
For information: Complaints
Monitoring and reporting
The Council recognises the need for prompt recovery action and will monitor the level and age of Corporate Debts outstanding, highlight areas of concern and issue reports to appropriate Officers as follows:
Sundry Debtors
Monitoring:-
- On a daily basis sundry debtor accounts will be checked to ensure that payment plans are being adhered to and where a customer has defaulted, decide what recovery action is applicable
- On a monthly basis the Accounts Receivable Manager will undertake a review of the level of debt outstanding and the age of debt and will decide on the appropriate recovery action to be taken
- Areas of concern such as old debt, debt on hold and disputed accounts will be highlighted and addressed with the relevant Service Manager.
- Ad hoc meetings will be arranged with Service Managers and Heads of Service to highlight areas of concern to include where a debt is disputed, on hold or value of debt outstanding.
- In accordance with Financial Procedure Rules all internal procedures must be followed by all Services to ensure the timely recovery of debts.
Reporting:-
- Monthly reports will be produced on the overall value of Sundry Debt broken down to invoices outstanding, age of debt and recovery stage and sent to the Principal Officer and Head of Service
- Reports will be sent to each Head of Service detailing value, age of debt and recovery stage
- On a quarterly basis, report to the Director of Resources on the value of debt outstanding including any recovery action taken.
Housing Rents, NNDR and Council Tax
- Rates of collection are prepared and monitored monthly.
Social Services Debtors
- A monthly scorecard containing metrics and performance indicators on a wide range of Social Care Debt is reviewed at DMT and at Social Care debt improvement meeting as part of performance monitoring. The data includes debt from customer charges, Health contributions to care packages and payments deferred against properties.
Appendices
Council Tax and CTRS
Pre-court procedures
- A council tax demand will be issued stating the amount and due date of the instalments.
- Failure to adhere to the statutory instalment scheme will result in a notice being issued, advising the customer of the amount of the arrears and that the debt is payable within 7 days.
- If the customer pays following this reminder, no further action is taken however if the customer defaults again a second reminder will be issued.
- Should the customer default after the second reminder notice has been sent, a final notice will be issued and the right to pay by instalments will be lost. The amount outstanding becomes due and payable.
- For Council Tax Reduction, the customer has the right of appeal against recovery of the reduction and a further right of appeal to the Valuation Tribunal. The reduction will be recovered by the issuing of a revised council tax demand and follow the same recovery procedure as above.
- During telephone calls, staff will where the customer is suffering financial hardship signpost them to the appropriate agencies.
Court proceedings
- Court proceedings will commence after the customer has defaulted following issue of the final reminder.
- Pembrokeshire County Council will lay a complaint to the Magistrates Court for a summons to be issued.
- Once authority has been granted by the Court a summons to appear will be issued to the taxpayer(s) giving the date and time of the hearing. This will incur additional court costs which will be payable by the customer. An advice note signposting the customer to the appropriate agencies to seek advice for debt counselling and to check if they are entitled to a reduction if they are having difficulty in making payment will be enclosed.
- The customer is advised to contact Revenue Services to discuss repayment of the debt to avoid having to attend court.
- At the Hearing the Officer will request that a liability order be granted by the Magistrates and that further costs are awarded and payable by the customer.
Post court procedure
- Once a Liability order has been granted a notice will be sent to the customer advising that an Order has been obtained and requesting information regarding their employer details, social security benefits, income etc.
- Upon receipt of this information the following may be appropriate:-
- Attachment of earnings
- Attachment of Income Support and other prescribed benefits
- Attachment of Councillors Allowances
- Charging Order (but only if the debt is more than £1000)
- Bankruptcy (but only if the debt is more than £5000)
- Arrangement with the customer for repayment of the debt.
- If no information is forthcoming a notice is sent requesting the customer contact us to discuss repayment of the debt and advising the debt may be referred to the enforcement agent and advising of the additional costs should the debt be referred to the enforcement agents.
- A further letter will be issued advising the debt will be passed to the enforcement agent and advising them of the additional fees associated with the Enforcement Agents actions.
- If no response an instruction will be issued to Enforcement Agents.
- A letter confirming the debt has been passed to the Enforcement Agents and any payment arrangement should now be made with them. This letter also contains details of all the additional fees that will be incurred dependant on the actions taken by Enforcement Agents.
Council Tax - flowchart
National Non-Domestic Rates (NNDR)
Pre-court procedures
- A non-domestic rate demand will be issued giving the customer 14 days’ notice of when the payment is due and the instalments due.
- Failure to adhere to the statutory instalment scheme will result in a notice being issued, advising the customer that the debt is payable within 7 days.
- If this reminder is paid in full, no further action is taken. If the customer defaults again a final notice will be issued with the right to pay by instalment lost and the amount outstanding becomes due and payable.
- During telephone calls, staff will where the customer is suffering financial hardship signpost them to the appropriate agencies.
Court proceedings
- Court proceedings will commence following the relevant reminders issued and when the sum remains outstanding.
- Pembrokeshire County Council will lay a complaint to the Magistrates Court for a summons to be issued.
- Once authority has been granted by the Court a summons to appear will be issued giving the date and time of the hearing. This will incur additional court costs which will be passed onto the customer. The customer is advised to contact Revenue Services to discuss repayment of the debt to avoid having to attend court.
- At the Hearing there will be a request for a liability order to be granted by the Magistrates and that further costs are awarded.
Post court procedure
- Once a liability order has been granted a notice will be sent to the customer.
- The customer will be requested to contact us to discuss repayment of the debt.
- Should the customer fail to make contact then a letter advising them that the debt will be sent to Enforcement Agents should they fail to pay or enter into a payment agreement.
- A further letter will be issued advising of the date on which instructions may be issued to an Enforcement Agent again requesting payment or contact to discuss arrangement.
- Instruction issued to Enforcement Agent and a letter is also issued to the customer giving a final opportunity to pay in full and advising of additional fees associated with the Enforcement Agents actions.
- Bankruptcy (but only if the debt is more than £5000) and where the Enforcement Agent has had to return the Order as no agreement reached and insufficient goods for distraint.
National non-domestic rates (NNDR) - flow chart
Housing rents
Pre court proceedings
- The customer will be advised of the weekly rent payable as part of their occupation contract and subsequently issued with a Payment Schedule Letter stating the rent payable and the due dates.
- The customer is required to pay their rent in the current week or as agreed with the Council.
- Proceedings will commence if the arrears on the rent account amount to 2 weeks rent or *£20.00 is outstanding.
- A reminder will be issued together with an advice note signposting the customer to seek advice from the appropriate agencies for debt and benefit if they are having difficulty in making payment. This will be followed 2 weeks later by a second reminder if no response to the first.
- If the customer is paying regularly but not in accordance with the current rent liability, the customer will receive an additional reminder letter, acknowledging that payment has been made but not cleared the arrears in accordance with their contract.
- If there is no response to reminders a Pre-Notice visit will be undertaken by the appropriate Tenants Financial Support Officers.
- If there is no response to the reminders & the account has serious rent arrears of 8 weeks rent and there are no Housing Benefit (HB) / Universal Credit Housing Cost (UCHC) or Discretionary Housing Payment (DHP) outstanding issues, one of the following notices will be issued; RHW23 – Notice of Possession Claim,
Notice to quit
- All notices will be issued to each contract holder, hand delivered by Tenant Financial Support Officer (TFSO) or sent via recorded delivery – if appropriate (Joint Contract Holders)
- An attempt to contact the customer by telephone / Text / Email & Contact letter will be undertaken.
- During telephone calls, staff will where the customer is suffering financial hardship signpost them to the Tenancy Financial Support Team (TFST) and / or appropriate agencies.
- An application for payment direct from relevant benefits from the Department for Work and Pensions will be issued where appropriate.
- If after 28 days an agreement has not been reached and there are no outstanding HB / Universal Credit Housing Costs / Discretionary Housing Payment issues, a further Contact Letter (Court Hearing Letter - CHEA) would be issued, warning of the intention to make an application to the County Court for a hearing date and to contact Revenue Services to discuss options within 7 days. Enclosed with this letter will be an insert which signposts the customer tointernal and external bodies who may be able to assist them with any housing or financial issues.
- A Pre-Court home visit / interview is contacted by the Revenue Officer to try and get the contract holder/s to engage and discuss the circumstances / make payment arrangement to avoid Court proceedings.
*NB The £20 financial threshold relates primarily to Contract Holders / Licence Holders who are receiving financial assistance towards their rent or have some but not full entitlement to HB / UCHC.
A RHW23 – Notice of Possession Claim, or Notice to Quit will be issued against any Contract Holder / Licence Holder who has a debt over £50.00 where no acceptable payment agreement has been reached.
Court proceedings
- Failure to maintain rent payments will result in proceedings commencing in the County Court.
- Upon receipt of the court documents issued by the County Court, a letter will be issued to the customer advising of the date and time of the hearing. A further attempt made for direct payment from the Department for Work and Pensions will be completed.
- On initial application to the Court, costs are payable by the Council which are recovered from the customer as directed by the Court.
- Once the case has been heard a letter and a copy of the Court Order will be issued to the customer confirming the outcome of the court proceedings
- Should the customer not comply with the terms stated in the Court Order, attempts will be made to contact by telephone / Text / Email / Visit by Tenant Financial Support Team.
- A letter will be issued to the customer giving them the opportunity to bring their County Court Judgement Order up to date. A further check will also be undertaken for any housing benefit/Universal Credit issues.
Post court procedures
- Should the customer fail to pay the amount due on the Court Order an application for a further court hearing date will be made to the County Court.
- Depending on the Order previously issued by the Court, this will be for a restored hearing, an application for possession or to apply for an eviction.
- Further Court costs may be applicable depending on which Order was previously issued by the Court, these costs would be reclaimed from the customer on directions from the Court.
- An application for direct payments will also be made to the Department for Work and Pensions if a relevant benefit is in payment.
- In the case where an eviction warrant has been granted by the Court, the customer will be advised of the eviction date, time and provide options of paying in full or apply to the court for a further hearing to suspend the eviction.
- The customer will also be signposted to our housing section, Citizens Advice, Shelter Cymru or other appropriate agencies. An Officer from the Council would also attend the property to check that the customer is still present and discuss their options with them. (Pre-Eviction Visit).
- All letters issued also include details of internal and external bodies who may be able to assist the customer with any housing or financial issues.
- During telephone calls, where it is identified that the customer is suffering financial hardship they will be signposted to the appropriate agencies.
Former Tenant Rent Arrears
- The Council will actively pursue former tenant rent arrears
- Reminder letters are issued on a regular basis to encourage engagement and to set up a repayment plan where the rent arrears cannot be paid in full.
- Where no contact is made by the customer the debt will be passed to an enforcement agent.
Housing rent recovery - flow chart
Garage rents
- Every customer will be issued a tenancy letter stating the amount and date the rent is due.
- The customer is required to pay their rent in the current week or as agreed with the Council. Failure to maintain their rent payments will result in the commencement of recovery action.
- Proceedings will commence if the arrears on the rent account amount to 6 weeks rent outstanding.
- A second reminder will be issued, two weeks after the first if the account has not been brought up to date.
- A third reminder will be issued, two weeks after the second if the account has not been brought up to date.
- If after the issue of the third reminder no response has been received and the account has arrears of over £50.00, a garage notice to quit will be issued and will be delivered by hand. by Tenant Financial Support Team or Tenancy Management Team (TMT).
- If after 28 days an agreement has not been reached, a further letter will be issued advising that it is the Councils intention to arrange for the locks on the garage to be changed and for the customer to arrange for all possessions to be removed.
- Ater the lapse of the 28 day period, if payment is not received or arrangement made, a request is made to Housing to arrange a lock change.
- During telephone calls, staff will, where the customer is suffering financial hardship signpost them to the appropriate agencies.
Recovery of unpaid garage rent - flowchart
Housing Benefit
- Invoices will be raised within 7 days after a decision on the overpayment has been made.
- Invoices will be issued on a weekly basis.
- Invoices will advise the customer to enter into a payment arrangement with the Council or if experiencing financial difficulties in paying their debts to contact the appropriate agencies.
- All invoices over £1000.00 are to be held by the Control Team and checked by Benefits. Invoice will not be sent until verified as correct.
- Invoices will contain offer of instalments. The minimum instalment is £10.00.
- A lower level of instalment may be accepted by a Senior Revenues Officer following the completion of statement of means form.
- Reminder action will occur where a repayment is not received or the claimant defaults in an arranged instalment plan. Reminders are manually raised by Revenue Assistant – Debtors.
- Reminder notices are issued 2 weeks after payment due date and also advise the customers to contact the Council to make an arrangement or if they require assistance with their debt to contact the appropriate agencies.
- Final Notices are issued after a further 2 weeks. Further checks must be made as to possible other means recovery, by use of CIS for deduction from other benefits.
- After further 2 weeks refer to enforcement agency/DWP.
- During telephone calls, staff will where the customer is suffering financial hardship signpost them to the appropriate agencies.
Recovery options:
- From arrears of HB that become payable while there is an outstanding overpayment (HB Reg 102 & SPC 83)
- By deduction from ongoing HB, subject to maximum recovery rates (HB Reg 102 (2)&(3) & SPC 83(2) & (3)
- By deduction from a partner’s ongoing HB, as long as claimant and partner were a couple at the time overpayment occurred and when deductions are being made. HB Reg 102(1ZA) & (SPC) 83 (1ZA)
- by deduction from certain DWP benefits (HB Reg 105/(SPC) 86
- by civil proceedings (SSAA1992 S75(subsection 7) (SSAA 1992 S76 (subsection 6)
- by 'invoicing' the affected person for the amount outstanding HB 102
- by applying to another LA to ask them to deduct the overpayment from the claimants ongoing HB entitlement in their area. (good practice only – not governed by Regulations)
- by debiting a rent rebate overpayment to the customers Rent Account, but you must separate HB overpayments to actual rent arrears
- by recovery from HB paid to a landlord/agent for another customer, i.e. when the landlord has been classed as responsible for payment of a debt (sometimes known as 'direct recovery from Landlords') HBR Schedule 9, Section 5(6) SSSAA 1992, HB Reg 102(1)& SPC Reg 83(1)
- from the estate of a deceased person who has an overpayment
- by Direct Earnings Attachment Social Security (Overpayments & Recovery Regs. 2013 Part 6 SSAA 71ZD, HB Regs 2006 Para.106A, HB (SPC) Regs Para. 87°
Enforcement Agent Action
- Unpaid debts will be referred to an external enforcement agency.
- A six monthly check will be made with the enforcement agency for an update of all outstanding debts. A benefit check will be made on all cases referred to the enforcement agency on a 6 monthly basis to see if an alternative recovery method is more appropriate.
- Payments will be received from enforcement agency on a regular basis (i.e weekly/fortnightly).
- An invoice will be sent by the enforcement agency with each payment received, requesting 10% of the balance of the cheque we receive.
- Where the enforcement agency is unable to trace the debtor, or enforce payment, the debt will be returned to the local authority.
Tracing People - Traces are made in the first instance and again 6 months later. Further checks will be made at 12 months prior to write off. Sources for Tracing are:
- Customer Information System (CIS)
- NAFN – tracing agency
- Council Tax/Housing Benefit database
- Former landlord/family
Suspension/Termination of Recovery
Recovery will be suspended where a dispute/appeal is in process, there is no Legal requirement to do so, but it is considered good practice. When deciding to terminate recovery and write off the debt each case will be considered on its own merits. The following list provides examples of where write off may be considered:
- Where the amount is uncollectible due to bankruptcy/insolvency.
- Where the debtor cannot be traced
- Where a debtor’s forwarding address is outside England, Wales or Northern Ireland, and consequently unenforceable by enforcement agency.
- Where a debtor is deceased. An invoice has been issued to the executors, but no further enforcement action is initiated.
- Where it is considered uneconomical to collect the debt by the Council
- Where the age of the debt precludes recovery or is status barred.
- Where all avenues of recovery have been exhausted.
Where a balance is approved for write off and at a later stage, a forwarding address is established, or a new claim for benefit made, the write off will be reversed and collection procedures reinitiated.
Court action will be taken where appropriate on housing benefit overpayment debts.
Housing benefit overpayment recovery - flowchart
Sundry debtors
Pre court procedure
- An invoice will be raised once an instruction is received from the relevant department.
- All miscellaneous invoices are payable immediately once issued.
- Periodical invoices are payable on the specified due date.
- Where the customer is unable to pay immediately in one lump sum payment, an agreement will be made with the customer to pay by instalments and within the current financial year.
- Where the customer is unable to pay the current debt within the financial year then an extended payment plan may be offered with the debt being cleared within a 12 month period.
- Where the debt cannot be cleared within the 12 month period then it will be to the discretion of the Accounts Receivable Manager to agree the repayment plan being offered. The plan will be reviewed annually.
- Where an agreement is arranged the letter/email will be issued confirming the agreed date of payment, amount and to contact the Council if they are unable to adhere to the arrangement.
- An advice note signposting the customer to the appropriate agencies will be enclosed if they are experiencing financial difficulties
- If the officer is unable to reach a reasonable repayment agreement or there is a default in the payment plan, the matter will proceed with debt recovery.
- If the there is no response following the invoice, the matter will proceed through debt recovery, as follows;
- Letter: Reminder one- 14 days to respond or make payment
- Letter: Reminder two- 14 days to respond or make payment
- Attempt to make contact after 38 days via telephone or email
- Matter reviewed for escalation after 45 days for legal debt recovery
- During telephone calls, staff will where the customer is suffering financial hardship signpost them to the appropriate agencies.
- Internal procedures must be followed by all Services prior to referral to legal, including provision of a summary of the actions taken before requesting a debt be referred.
- Referring claims to legal will be undertaken as a last resort. (If there is a risk of potential cost to the Authority should it fail to recover the costs/debt this should be referred to the Chief Finance Officer at earliest opportunity).
Court proceedings
- If the invoice remains outstanding following the initial debt recovery stage, instructions are escalated to the legal department where a Letter before Action will be issued outlining the nature of the claim and provide a deadline to respond.
- If there is a response within the timeframe and a reasonable payment plan set up, the matter is referred back to the Sundry Debt department to monitor payments.
- In the event there is no response to the Letter Before Claim, a County Court Claim is issued for the amount outstanding. Court costs plus interest are added to the outstanding amount at this stage, increasing the customer’s liability.
- Failure to respond to the court claim will lead to a County Court Judgment being entered, increasing the costs and interest payable by the customer.
- A payment proposal can be given at any point throughout proceedings and, if accepted, the Court Order will reflect the same.
Post court proceedings
Following receipt of the Judgment, a Judgment letter is issued outlining the intent to enforce the Judgment if payment is not made within a specified time.
Should there be a failure to pay the Judgment, one or more of the following Enforcement actions will be taken; which will incur additional court costs which will be passed onto the customer
- Order to attend Court
- Attachment of earnings
- County Court enforcement agency
- High Court Enforcement
- Legal Charge over property
- Third Party Debt Order
This is not an exclusive list and the choice of Enforcement action will be determined on a case by case basis.
Sundry debts - flowchart
Social care (residential and non-residential)
Section 70 of the Social Services and Well-being (Wales) Act 2014 sets out general provisions for the recovery of Social Services debts. Part 4 & 5 Code of Practice (Charging and Financial Assessment) and relevant regulations provide specific requirements for debt recovery.
The local authority:
- Will consider each case on its merits based on the needs and characteristics of the person, including their potential vulnerability.
- Will ensure the person concerned understands the nature of the debt which has occurred and the consequences of this.
- Will take all reasonable steps to ascertain the reason for the debt accruing and only where it is clear that it is as a result of a person’s deliberate non-payment, will the debt recovery process be activated.
- Will pursue all other reasonable options to collect the debt before using debt recovery powers.
- Will comply with legislated timescales for recovery of accrued debts.
Pre Court Procedure
- Care and support needs are identified during our assessment process.
- A care and support plan will include what care and support will be provided and by whom.
- Social workers provide information to the customer[1] on care charges.
- An invoice will be issued every 4 weeks for services received within that period. Payment is due within 14 days.
- If the customer has not paid within 14 days of the date of the invoice a reminder will be issued.
- The customer can be supported through this process by family, a friend or third party such as an advocate.Contact details of the free advocacy available to all customers is included in our letters and available factsheets.
- During face to face discussions, telephone calls, and in correspondence, the customer will be signposted to the appropriate agencies if suffering financial hardship.
- We will implement the social care debt recovery process outlined below in 7 steps.
Once charge has been confirmed our process for debt recovery is:
Step 1 First Invoice Reminder is sent 14 days after the initial invoice.
Step 2 Automatic Debt Reminder Letter is sent 14 days after the first reminder letter (step 1). This letter invites customers to set up a payment or to contact the social care debt recovery team for any information, advice or guidance.
We strongly advise customers to seek support from advocates or legal advice - 14 days after first reminder.
Step 3 First Debt Recovery Letter - inviting customers to meet with our debt recovery team to discuss payment arrangements or review of finances. This letter is sent 28 days after the automatic Debt Recovery Letter (Step 2).
If customers are supporting someone because they lack capacity to manage their financial affairs, this meeting will enable us to work with them whilst they may be going through Deputyship / Power of Attorney or Probate matters
As part of this finance review should any concerns be raised regarding the management of the service user’s funds the team will seek advice from the adult safeguarding team
If, during the debt recovery process, deprivation of assets is suspected or other queries regarding capital arise, advice will be sought from our legal team.
If a property under the name of the service user is known, to secure the debt, the local authority will set a charge section 71 in accordance with the Care and Support (Charging) (Wales), the Land Registration Rules 2003 and Land Registration Rules (Miscellaneous Amendments) Regulations 2020
Step 4 Second Debt Recovery letter - Encouraging customers to make contact to resolve the situation together as soon as possible - This letter will be sent 28 days after the first Debt Recovery letter (Step 3).
If needed, customers can provide additional information. If they do not agree with the care package they can make an official complaint and if they believe that their charge has been incorrectly calculated, they have the right to appeal.
During the period of appeal or complaint, the debt recovery process will be in pause but invoices for the care contribution will still be raised until the situation is settled. At that point the care contribution may be revised, and the previous invoices may be cancelled and new invoices with the new revised contribution will be raised
Step 5 Final Debt Recovery letter - This letter will be sent 28 days after the second Debt (Step 4) Recovery letter.
If the invoices remain unpaid and customers have not engaged with the debt team the case will be referred to our legal team. We encourage customers to meet in person as soon as possible to find a solution to the debt through further mediation with the finance and social work teams
The legal team will review all documentation relating to the debt. Our legal team will write to inform customers that the case has been referred to them
Step 6 Our legal team will review the case and decide whether to progress with Court Action to recover the debt. The legal team will inform customers of any additional charges such as Court Fees and interest payments relating to the debt. This is the final opportunity to settle the debt or arrange a payment plan
Step 7 Case heard in Court
Court Action is a last resort for the team. We advise customers to talk to us as soon as possible so that payment arrangements can be put in place. At all points in the process customers are invited to discuss the situation with an advocate, seek legal counsel, discuss with a Social Worker or any other person able to support them.
Social services debt recovery process - flowchart