Can’t afford Council Tax?

You won’t be alone. Council Tax is vertigo-inducingly high, and each year it gets higher and the distance we are from affording it gets so much longer. Once we’ve added in all the extra joys of the cost of living, it’s bewildering that we aren’t all out on the streets. Payday, these days, feels like the day of the month I get shaken down. It’s like living in a gigantic game of financial Jenga — you move a bit from here to there and then try to get back on top, while the whole structure is wobbling about like Boris Johnson’s spare tyre on a morning ‘jog’. Add in a couple of unforeseen bill-shocks (vets, tyre replacement etc) to spice things up and then play the suspenseful game of seeing if you can get to the the next pay day before your entire financial framework burns down. Fun isn’t it?

Enough moaning from me. Back in debt advice world, I had some success this week; two on the same day. So I thought I’d share what I did, what the clients did — how we got the right result between us and the impact this has had on the clients’ lives. Spoiler — lots of tenacity/grit/stubbornness/willingness-to-believe-fairy-tales-really-do-come-true-required.

The two clients’ background stories have some similarities: both were emerging, mentally beaten up from difficult divorces. Both were facing divorce-hangover bills that they couldn’t afford to pay. Neither could see a way out.

Case study 1:

‘Gemma’ had been in a long and troubling marriage. Her husband was a high earner. He controlled the money (and her). Gemma focussed on raising their children while the husband ensured she had money for shopping and little treats, like beauty treatments and nice clothes. All was well as long as she behaved in the manner he expected, and kept her own ambition and needs very much to herself. Finances were never discussed.

When things fell apart, he had the best lawyers money could buy. Gemma had to borrow money to pay her legal bills. (She’s managed to pay most of it back thanks to having 3 jobs which fit around the children, but it’s taken a lot of determination and going without to get there.)

And to give the ex his dues, he does pay maintenance for the children. Which helps.

But to have spent so many years being kept away from the bills and having no say at all in the financial decision-making, Gemma, on her own with her children, just didn’t know where to start.

She had to claim benefits for the first time – working and child tax credits as it was then, and still is for the time being. She couldn’t afford the car on hire purchase, so gave this up and started borrowing a friend’s car to get to her various places of employment. (She’s a minimum-wage care-worker by the way).

While she was solidly reconfiguring her finances to make her new situation work, the one thing she overlooked was Council Tax. It then became the thing she couldn’t look at. It was scary — the letters were serious, and talked of court summonses and enforcement action. Then the bailiff letters arrived and they were even more terrifying — outright threats about ‘removing goods’, ‘recommending prison’ etc.

It was just over a year ago, Gemma contacted debt advice for help. There were 2 years of arrears at that point. Contact with Gemma was on and off for months. She needed help and advice but also wasn’t in any shape to act on it. Things were still raw and she was working all hours. I left the door open in the hope that she would come back when she was ready.

Around November time, with the current year of Council tax now in arrears, Gemma got in touch again with a new resolve. First thing we did was claim Council Tax reduction which brought the total down a bit. Then we set up a payment plan to start tackling the oldest year of arrears while bringing the current year up to date. It was manageable, but there was still a year’s worth of arrears sat at the bailiffs and there was no negotiating anything remotely affordable with them, the only thing left was an application for a Discretionary Reduction.

For those that don’t know what I’m on about, local authorities are given a limited amount of money from government to help people with Council Tax and other financial crises. All local authorities in England offer them — the government website disappointingly has no information, but mentions Discretionary Housing Payments, with is similar but limited to assistance with rent instead. Look at your local Council’s website to find details of how to apply.

With life continuing to throw curveballs at Gemma (a close relative suffering a mental health breakdown, an elderly parent unwell) it took yet more months for Gemma to provide me with all of the information I needed to make the application, and it was finally submitted early April 2023. All this time, we had managed to persuade the Council to keep the bailiffs on hold — somehow.

Then came the questions. Bank statements showed transactions which needed to be explained. Why is that person paying Gemma money? Answer — she is auctioning off her last remaining valuables in an effort to repay the legal costs. Who’s that payment to? Answer — the relative enduring a mental health crisis, currently on Gemma’s sofa, with not a penny to their name. What’s this Paypal account? How much money have you got in it? Answer: minus £200. It used to be minus £2000 but Gemma has been paying that down slowly too.

Every question got an answer. Every request for more bank statements, was met. Finally, we had to submit a new financial statement, to show once again, that Gemma was suffering genuine financial hardship.

By this point, I was already letting Gemma down gently, certain the application would be refused, and preparing for the next strategy to form. Gemma was now up to date with her latest Council Tax bill and was keeping up with the payment arrangement to the oldest year of arrears.

Maybe that swung things in her favour — because it was obvious to anyone that she was really trying to manage and get back in control. When I received the email to say that the year of arrears with bailiffs had been completely wiped, and the summons costs removed (just over £2000), I felt like I’d won something myself.

Gemma couldn’t believe it. Literally. Three times she replied to my email saying it was so great the account was no longer with bailiffs but would she need to set up a payment plan? No, it’s been written off. But when will I need to start paying, will they let me know? No, it’s been written off. Excellent, so will they send me a payment plan? No, Gemma, it’s gone.

Gemma’s reply:

“It’s gone??!! I can’t believe it!!! I really can’t believe it!!! I think I’m in shock — in a good way!! Thank you so much, I can’t take it in, that I haven’t got a big debt hanging over me .

I honestly feel like my world has just changed, wow!!!”

I’ve redacted out 4 or 5 lines of profuse gratitude, because this kind of thing — and I know this sounds sanctimonious but — it’s its own reward. It’s what debt advisers do all the time. So much is out of our control and we’re all suffering to some extent or another, but these little moments are what it’s all about; that you achieved something, and another person’s life was made better for it. What a privilege of an experience that still is.

Case Study 2:

‘Lindsey’s’ case was the stuff of nightmares for anyone going through the final throes of a divorce. I’ve only heard one side of course, but it appeared that she was being taken for everything she’d worked so hard for, for years. An ex-husband who followed the clichéd road of hooking up with a younger woman and running off to live his best life, with no thought for his wife, the bills, the marital home, the debts he had helped to run up. He paid for nothing for 5 years, while Lindsey tried to keep the house going on her own, borrowing for substantial repairs on the property, seeing her monthly salary disappear in the growing black hole of bills, credit card payments, loan repayments, legal costs.

The District Judge in the divorce case granted the ex rights over everything, including half her pension when the time came. Of course I don’t know all the ins and outs of the case, but this is a tale I’ve heard before. If a man (or woman) essentially breaches the marriage contract by having an affair and then doing one, why are judges so happy to reward their behaviour with settlements like that? I don’t understand at all.

Lindsey was a working professional with a decent salary. But she just couldn’t find any more money for Council Tax and — while the property was still in joint names with Romeo, she wondered why exactly all of these bills were solely down to her. The reminder letter came, then the final notice — Lindsey had, had enough. She rang the Council and told them the truth about her situation. But more than that, she told them she was reaching the end of the line. This was the last straw, and she couldn’t go on fighting.

A couple of emails followed, but then an email bounced back to the Council with an out-of-office that simply said ‘I am off sick’.

Alarm bells were already ringing. A referral to debt advice quickly followed.

I spoke about Lindsey in another blog about debt and shame. Lindsey was the lady who cried before coming to see me because she felt deeply ashamed of needing help. She was a capable, intelligent woman who equated needing advice about debt as somehow failing. I can identify with this — I shouldn’t need help, but I do. So screw it.

We may have spent half of our initial meeting dealing with that and putting it firmly to one side, and then I listened to the horror story of her divorce and the apparent unfairness of it all.

And then there was the Council Tax. For a house she had to sell, on which she had spent tens of thousands, which she would be paying back forever, for which Valentino was about to take half while paying precisely nowt. Was it unfair? Yes it was. Would the Council hire private investigators to find out where he now lived in order to pursue him for his joint and several liability? No they would not.

We went through income and outgoings. Every penny was accounted for. Normally, you might advise stopping paying the non-priority creditors and paying the Council Tax instead — that’s what the books tell us to do. Prioritise. But it didn’t seem to me to be the appropriate course of action this time.

Lindsey was already struggling with her mental health and trying to hold it together — at least until the house was sold and the ties broken. She then needed to start over — despite everything, her credit score was impressively high. She was paying back all that she had borrowed with no defaults anywhere. Advising her to start breaching credit agreements was not in her best interest.

So once again, I advised about the discretionary payment process and that I would help with the application. I knew it would be arduous but I couldn’t see an alternative at that point.

As with Gemma, bank statements were requested, along with proof of debts, savings accounts statements and so on. A copy of the divorce settlement was requested (because no-one could believe it could be that harsh), and Lindsey provided it, along with everything else.

There were questions too about transactions — why are you transferring money from here to there? Answer — to pay bills. What’s this payment for? Answer — therapy. And so on.

At no time though — now I think about it - was I asked about transactions involving take-aways, or Apple Music purchases, or Netflix subscriptions. I like to think that in the real world, Councils aren’t stupid enough to surmise that the Council Tax would be plenty affordable if only the ‘rate-payer’ would give up cappucinos.

And I do understand the need for forensic checking — they are audited to within an inch of their lives — this is public money after all. And it’s finite, so they have to be very sure that the applicant is experiencing severe financial hardship before they pay it against the person’s Council Tax account.

In Lindsey’s case, another bill for 23/24 had dropped, so the total outstanding was now in excess of £3000. I had asked for this to also be considered in the application.

When the result came last week — moments after I received Gemma’s decision — I couldn’t believe it. They’d cleared the lot. Discretion can be a wonderful thing.

Lindsey’s reaction:

I cannot thank you enough — I have tears in my eyes. I am so relieved and also HUGELY grateful for your encouragement and kindness and support

I have so often been on the point of just giving up fighting as over the last 6 years as I have been worn down but to know that there are good people like you is SO reassuring — I wish I could give you a huge hug and a work related BONUS ! Rest assured that you have changed my life for the better.

This all feels a bit ‘horn-tooty’ again (also, work-related bonus! Debt advisers everywhere cry out ‘chance would be a fine thing’) — I promise that the point I am trying to make is that Discretionary Payments are worth applying for, are worth bearing with, are worth answering endless questions for and providing umpteen bank statements as requested, because once you have answered every question, dotted all the i’s and j’s and crossed the T out completely, then you’ve shown genuine hardship and the application should be successful. That one win — when everything else is going to shit — is so important for us and for clients.

They don’t call us a Tenacity of Debt Advisers* for nothing.

*Tenacity is the collective noun for a group of debt advisers as decided by 26 people off Twitter :-) It works.