Is Their Help Available For Someone Who Can’t Pay Council Tax Arrears?

This blog answers the question “Is Their Help Available For Someone Who Can’t Pay Council Tax Arrears?” It mentions the help websites such as the Money Helper website and the Debt Advice Foundation can provide to reduce your council tax arrears. You can dispute your council tax entitlement if you think it is calculated incorrectly. The blog also explains the procedure of applying for bankruptcy to write off council tax arrears.

Is Their Help Available For Someone Who Can’t Pay Council Tax Arrears?

If you are unable to pay your council tax arrears you can choose to dispute your council tax entitlement. For this you need to write to your council mentioning why and how this is the case and which change in circumstances have not been considered in its calculation. You also need to inform your local council about your reasons for not being able to pay the money you owe them.

You can also use the digital advice tool on the National Debtline website to receive free, instant debt advice. Another debt advisory service is MoneyHelper, which provides guidance on how to pay back your debts in the right order. 

You can use the Bill Prioritizer on the Money Helper website to get the right information on what to do if you are having problems in covering your council tax amount (before you end up missing a payment)

The Debt Advice Foundation helps you to cut down on your debt through tools such as the Personal Debt Analyzer. The Personal Debt Analyzer tells you how long it will take you to repay your debts, how to negotiate with your creditors to reduce your payments, and how much you have leftover to repay your creditors once expenses such as your monthly bills and priority debt (such as council tax) have been accounted for.

The Debt Advice Foundation also explains solutions to handling debt such as a Debt Relief Order. The parent charity of the Debt Advice Foundation was registered in 2002 as the Fonco Trust. The founding members of this foundation are Andrew Redmond, John Reynard and Paul Latham. The aim of this foundation is to provide free debt advice and solutions to all who need it.

What is the Exceptional Hardship Payment benefit and how can I apply to get it?

If you are receiving council tax reduction but despite this, your remaining council tax bill payments are causing you significant financial hardship, you can apply for this Exceptional Hardship Payment benefit. This benefit is only for short-term financial problems and is not intended to be claimed indefinitely. 

You need to inform your council as soon as your circumstances change and you are able to pay your full amount of council tax (with tax reduction incentives) The Exceptional Hardship Payment will be credited to your tax account to reduce the amount you owe

Each case is looked at individually and paid for different periods of time, so make sure you provide full and accurate proof of your current financial situation. You must be receiving Housing Benefit or the Housing Cost Element of Universal Credit to qualify for getting the Exceptional Hardship Payment Benefit and there must be a shortfall between your Housing Benefit and your rent that you cannot afford.

To complete the Exceptional Hardship Payment benefit form you will need your Benefit case reference number or your Council Tax account number or your National Insurance number.

What Council Tax Support Can I Get To Help With Paying Arrears, If I am aged above 65?

Pension age council taxpayers receive State Pension Credit to help with Council Tax Arrears. If your situation is critical then you might qualify for Guaranteed Pension Credit too, which is meant to help out homeowners in their time of financial strife. The support covers your entire bill and helps to pay off any arrears. 

Do I still pay council tax if I have been declared bankrupt?

If your council tax arrears exceed £5000, your council tax arrears will be written off by a Direct Relief Order (DRO) A DRO freezes your debt and interest repayments for 12 months. If your financial situation hasn’t improved at the end of this period all your debt will be written off. This option of getting a Direct Relief Order is only available if your debt is under £30000 and you are ineligible for it if you own property

If your debt is more than £30000 and your creditors have made sure that there is no way to recover debts from you. Under bankruptcy proceedings, you are first summoned to court and then your account is passed on to solicitors who will send you a statutory demand (this gives you a period of 21 days to pay back the full amount you owe)

Next, if you are unable to settle this statutory demand HMRC will present a petition for bankruptcy or liquidation to your council court. The court will then make a bankruptcy order

The following financial penalties apply when you are declared bankrupt:

  • Your home could be sold to recover your debts
  • Your bank accounts could be frozen
  • You may not be able to obtain credit exceeding £500
  • The official receiver will control you spending for the next three years
  • You will also no longer control your assets, and the official receiver will decide which ones if any, you can keep in your possession

HMRC will only petition for bankruptcy as a last resort if all other ways of making you repay your debt fail. As long as you are in the status of bankruptcy you will be exempt from paying council tax.

How Do I Apply To Become Bankrupt?

You can only apply to become bankrupt online by clicking here . The fee for claiming bankruptcy is £680 . Your application needs to be supported by the following documents:

  • Copies of your latest utility bills including council tax, gas, water usage (your property’s rateable value multiplied by the tariff charge), and electricity bills.
  • Details about the benefits you are receiving. Also information about any pension age support payments you might be on.
  • Copies of your payslips (these show the number of hours you have worked
  • Copies of letters from a bailiff, who has attempted to make you pay off your council tax debt 
  • Copies of any unpaid council tax bills from previous years
  • Fines which you have received from a court (which may be the crown court or your county court etc). These fines will be entered as part of your outstanding debt while going into bankruptcy.
  • Details of your unpaid debts which may include credit card debt, mortgage debt, council tax debt or student loan debt.
  • Copies of your credit card statements
  • Copies of any hire purchase agreements you have entered into (stating the agreement status in case of entering into personal bankruptcy)
  • Details of any loan repayments you still have to make
  • A copy of your (current year’s) council tax bill (unpaid or partially paid)
  • Copies of rent agreements with your landlord.
  • Copies of any mortgage agreements to document mortgage repayments which need to be made in the future.

Your online application containing this uploaded and scanned documentation evidence can be saved. It will be complete for submission once you have paid the £680 fee (in full). Help or advice for filling out a bankruptcy application form can be obtained from the Money Helper website.

Your financial condition for bankruptcy must be such that the value of assets or money in your possession (as well as any future income or benefits payments) should be lesser than the amount of debt you have accumulated.

What if I think my council tax reduction is wrong?

When any decision is made on your Council Tax Reduction claim, you will get a letter informing you about its details. So if you think this decision on your council tax reduction is wrong, you must contact your local council within one calendar month of the date on this letter (if you wait longer, council tax may not be able to consider your dispute)

You can either ask council tax for an explanation of your tax reduction calculation or you can ask them to reconsider the decision of awarding your reduction. If the decision can be changed, your council will send you a letter with the details of the amended tax reduction.

If your local council feels otherwise, that the decision cannot be changed, they will let you know the reasons for this refusal.

You can contact your local council (to enquire about your council tax reduction or to request a change in it) by writing to their email address or by telephone from Monday to Friday between 8 am and 6pm. 


This blog post answered the question “Is Their Help Available For Someone Who Can’t Pay Council Tax Arrears?” If you are unable to pay off your Council Tax Arrears in the long run, you might have to consider options such as applying for bankruptcy or getting a Debt Relief Order to solve your problem. In the situation where council tax arrears accumulate persistently, you need to manage your debts better in order to steer clear of your past payment record.

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Frequently Asked Questions (FAQs) : Is Their Help Available For Someone Who Can’t Pay Council Tax Arrears?

What is Bereavement Support Payment?

The bereavement support payment is money that you might be able to claim if your husband, spouse or civil partner died after 6th April 2017

There are two rates of bereavement support payment:

  • The first option is that you could get 2500, followed by a further 18 monthly payments of 100
  • If you’re responsible for a child under the age of 20, the second option applies and you could get 3500 followed by a further 18 monthly payments of 350

You can claim the Bereavement Support Payment under the following conditions:

  • The bereavement happened on or after 6th April 2017
  • You were under state pension age when your spouse or civil partner died
  • Your partner paid National Insurance Contributions for at least 25 weeks in any single tax year since 1975
  • You were resident in the UK at the time of the death of your partner

What is Support for Mortgage Interest?

Support for Mortgage Interest (SMI) is a loan to help you pay for the interest on mortgage payments. If you have enough equity in your property, you will eventually be paid back what you borrowed (either when your property is sold, its ownership is transferred or it forms part of your estate after your death)

You could get varying help from the SMI Loan in these 2 cases:

  • You receive Pension Credit. In this case you can get help on paying interest up to 100,000
  • You don’t receive Pension Credit. In this case you can get help on paying your mortgage interest loan upto 200,000

In most cases the SMI Payment is made directly to your lender, the interest is calculated at 2.09%(compounded interest rate)

You can be eligible for claiming the Support for Mortgage Interest (SMI) loan if you receive one of the following benefits:

  • Pension Credit
  • Income Support
  • Income-related Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Universal Credit

What is the local housing allowance and which circumstances affect the amount of benefit I can receive from it?

The local housing allowance is used to calculate the maximum amount people renting from a private landlord can claim in Housing Benefit or Universal Credit. This maximum rent is based on where you live, the number of bedrooms you need and the rent you pay. You can use this webpage to calculate the amount of benefit you will get