Case Notes – #1

Debt Relief Orders – a surprising but sensible approval, a shout out to Savings Pension Credit, and Council Tax enforcement (no, Martin, they’re not like the worst loan sharks at all).

Debt Relief Orders – unadapted vehicles for disabled people worth more than £4,000

I think this is huge. A debt adviser colleague recently had a client who was buying a car on a hire purchase agreement. They had taken out the contract earlier this year. The car was valued at around £10,000, but of course, they won’t own it for years.

The monthly payment was around £240 per month, which just so happened to be roughly the amount the client received in Personal Independence Payment for Daily Living. No mobility component. However, the client couldn’t manage without the car due to her disability. Without it she was completely stranded.

As any debt adviser will know, a payment of £240 per month for a car worth more than £4,000 is not an allowable expense for a Debt Relief Order, which is the debt solution the client sought.

So, they couldn’t have a DRO then, right? Wrong. The debt adviser gathered medical evidence, which backed up the client’s assertion that the expenditure was essential for meeting her mobility needs (despite the DWP clearly thinking otherwise with their nil points for ‘Moving around’) and they agreed to put this to the DRO Unit, to see if the expenditure would be accepted.

With the £90 fee for a DRO abolished, there was effectively nothing to lose by trying. And…the DRO Unit accepted the evidence and the client’s assertion that the expenditure was necessary. It makes sense – PIP or DLA can be offset against health & care costs, so why not against mobility/travel?

Medical evidence is definitely recommended, and this must show that the vehicle is essential to meet the client’s disability needs. This doesn’t necessarily mean it has to be adapted – as this is already covered in the DRO guidance:

The £4,000 limit for vehicles does not apply if they have been adapted for disabled people.

Any vehicles that have been adapted for disabled people should be declared as an asset. If this applies, approved intermediaries should tell us at the time they submit the application.

Pension Credit – let’s not forget savings credit!

While the government attempts to convince us that stopping the winter fuel payment for pensioners will be fiscal Polyfilla for the mysterious black holes that keep appearing in the Treasury’s Excel spreadsheets, the DWP had a go at campaigning for pensioners to apply for Pension Credit, in order to pay out top-ups of Pension Credit, and then Winter Fuel Payments as well. This is not only a fantastic opportunity for pensioners to increase their weekly income, but also for data/tech companies to make an absolute packet from local authorities who can – for a decent fee – hand over their residents’ benefit claim data and then have it analysed and returned with eligible pensioners identified. Win, win, win.

It’s worth bearing in mind that Savings Credit is also an element of Pension Credit – though it is spoken of much less than its more popular sibling Guarantee, probably because it’s as much use as a chocolate teapot to anyone becoming a pensioner after April 2016 – but for those that didn’t claim it, a reminder that to qualify for Savings Pension Credit people must have reached State Pension age before 6 April 2016 and have some additional retirement income, e.g. savings or a private pension, which brings their income above the Savings Credit starting point, which is:

• £189.90/week for a single person
• £301.22/week for a couple

Eligible pensioners can get Savings Pension Credit with or without the Guarantee element.

It’s worth a maximum of:

• £17.01/week for a single person
• £19.04/week for a couple.

No, it’s not a fortune in and of itself, but it does open doors to extras such as the Winter Fuel Payment (£200-£300 depending on age/circs). In order to qualify, they would need to be entitled to either or both elements of Pension Credit during the ‘qualifying week’, which is 16th to 22nd September 2024, and this includes backdated entitlement. So a claim made on 21st December 2024 at the very latest, can be backdated to the qualifying week.

Don’t let pensioners be put off by tales of forms containing 249,000 questions. Of all the forms in all the DWP’s arsenal, the Pension Credit claim form is perhaps one of the least painful and probably the easiest to complete. If they can’t face it, they can of course get help from the usual places.

Council Tax – bailiffs and what Martin Lewis said.

I’ve long been in staunch opposition to Councils using bailiffs in the enforcement of Council Tax liability orders. In fact, nothing gets me grumpier faster than witnessing a terrified client recounting a visit from one of our certificated friends, with all of the unsubstantiated threats they inevitably make, including but not limited to overstating their ‘powers’, threatening to remove goods they haven’t yet taken control of, refusing to believe that anyone at all is either disabled or vulnerable in any way, refusing to believe that the person in debt doesn’t have easy access to a large stash of readies to satisfy their debt in full.

Time and again we in advice world hear about bailiff standards, conduct boards, vulnerability policies, wellbeing teams and a commitment to the highest levels of professional behaviour, while at the same time we all know that bailiffs are only really compensated for their time and effort if they bring in the moolah, so all the happy clappy wellbeing policies in the world don’t really count on the doorstep, when it’s their word against yours and the bodyworn camera footage appears to have gone missing. Oh dear.

When Martin Lewis and the Money & Mental Health Policy Institute started their campaign on this issue, joining Money Advice Trust, Acorn, Debt Justice and a nation of debt advisers who want to ‘Stop The Knock’, ‘Boot the Bailiffs’ etc, they likened Councils to the ‘very worst loan sharks’, criticising collection and enforcement practices for being too aggressive.

Yes, the liability order process is a bit of a, well, racket, actually. How many times have we heard Alan Murdie, Barrister and IMA trainer, tell us that the true cost of obtaining a liability order from the Magistrates Court is around £3 – yet Councils charge anything between £60-£130 for the privilege. And that’s on top of the CT arrears and before the bailiffs have even mentioned the word ‘compliance’.

As for this business of missing one payment and finding 7 days later that the whole year’s bill is due, Martin Lewis and others omitted to mention the very important ‘reminder’ stage. Debt Advisers know all about it, because if we want to include the whole year’s balance on a DRO then we literally have to wait – sometimes weeks, depending on the efficiency of the Council in question – for the reminder to expire so that the whole year becomes due. (And that’s a good thing for a person recovering from unmanageable debt – it gives them a breather to the following April).

Councils clearly need the revenue from Council Tax – it’s an unfortunate truth, but they do. I don’t like paying £200 a month to my Council any more than the next person. And they know that some people can’t pay it, but they don’t know which people simply don’t want to pay (there are Freemen on the Land types out there after all), and which genuinely can’t. And they don’t have the resources to investigate and determine who is which. So, they have to follow the regulations and attempt to get the Council Tax in one way or another.

It may well be that bailiffs are the least impactful of an unpleasant bunch of options. Attachments of earnings aren’t great because they are based on fixed percentages, and you might want to negotiate something more affordable. Attachments of benefits aren’t super either – benefits are designed to produce the most uncomfortable living experience a person can endure, so taking more money out of that horribly small allowance is insult upon injury. Then it gets even more serious – charging orders, bankruptcy, orders for sale, and even prison, although these latter 4 methods of enforcement are mercifully rare and very much last resort options.

Bailiffs collecting Council Tax can knock at your door and as long as you haven’t got a nice car or other valuables outside your home, then honestly, what can they do? You don’t have to let them in, talk to them or even acknowledge their presence. They can only do this so many times before they are forced to return the debt back to the Council.

I can’t think of an instance when it isn’t better all round to simply contact the Council at the earliest opportunity and ask for help. Discretionary help is available to those who need it. It’s got to be better than any of the above consequences. Taking advice is better than doing nothing, but we don’t always do what’s in our best interests.

What Councils don’t do however, is charge 5000% interest and threaten to break every bone in your body if you don’t pay. They don’t threaten to hurt your family, or burn down your home or ruin your reputation. And there are worse things even than those threats that I won’t repeat here. So I thought the comparison from Mr Lewis was in poor taste and hyperbolic. And made light of the really serious criminals getting away with their illegal money-lending on a daily basis. We see those terrified clients too – so frightened that they won’t even talk to the Illegal Moneylending Team about their situation, anonymously, in confidence.

It worries me though. He’s a big influencer, with a massive audience, and he regularly has the ear of the Chancellor or other Very Important Persons. That someone with his clout and devout following would basically state that the Council is just as bad as the worst loan shark might mean that someone who really needs support and advice doesn’t ask for it, and therefore doesn’t get it. That’s a bad call in my opinion.

He could join the existing campaigns to ban the use of bailiffs by local authorities, full stop, if he wishes to do something useful. And not just for those in receipt of Council Tax reduction or support, not just for those on benefits, but for everyone – yes, even the won’t-payers. Plenty of people – like pensioners, for instance – are just above that threshold for what is considered ‘low income’, and can no more afford Council Tax than they can all of the recovery fees added on top.

Finally, it’s the Greater Manchester Money Advice Group quarterly meeting next week and we’re focusing mainly on disability and debt. We’ve got great speakers lined up and it’s sure to be thought-provoking and informative for our members. I hope.

We were hoping to have representatives from the DWP attending to talk about some research into government debt recovery they have been conducting. Unfortunately, as with most things connected to the DWP, it was a let-down. They won’t be attending after all. So the title of the meeting has been amended to: Disability, Debt and the DWP Declines. In more ways than one.

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Bye for now.