policy for recovery of sundry debts...created on 21/08/2014 16:40:00 last updated 24/07/14 page 1 of...

Created on 21/08/2014 16:40:00 Last updated 24/07/14 of 16

POLICY FOR RECOVERY OF SUNDRY DEBTS

Scope and Purpose of this Policy 1.0 The purpose is to establish a policy to ensure consistency, equality and probity in the

collection of sundry debts. The policy is intended to ensure that the recovery of debts is conducted in accordance with recognised best practice in the following areas:

Debt collection

County Court Code of Practice

Audit controls 1.1 This policy applies to the following categories of debt:-

Commercial debts covering invoices raised for rents, insurance, service charges, way-leaves, licences, clinical and trade waste collection

Domestic debts covering invoices raised for insurance, cesspool clearance, special collections, sundry environmental health charges

Housing benefit overpayments including fraud cases

Fees and recharges such as building regulations, planning fees, rechargeable repairs and works undertaken in default.

Personal debts covering invoices for community care services, sports and leisure bookings and residual membership fees, salary overpayments and the recovery of training expenses. The process for collecting parking related penalty charge notices can be found in Appendix B of this policy.

Rent and service charges for hostel and bed and breakfast accommodation. Former tenant rent arrears arising prior to large scale voluntary transfer of housing stock and rent deposit loans raised under the private rented assistance scheme.

1.2 This policy does not cover

Council tax

Business rates

Housing benefit overpayments which are being deducted from ongoing benefit

Penalty notices raised for environmental offences such as littering

Some miscellaneous services, which are charged in advance such as pest control, refuse sack sales

1.3 All housing rents in respect of current tenancies and housing rents arising from

tenancies terminated after the large scale voluntary transfer of housing stock on 23

Reviewed and updated 24/07/14 2 of 16

January 2006 are the responsibility of the B3 Living and therefore not included in this policy.

Overview 2.0 The Council has both a statutory and fiduciary duty to ensure that all money owed is

promptly collected whenever possible. However, the Council has to balance the level of enforcement undertaken to collect the debt against the value of the original debt and the circumstances of the debtor to ensure that all actions taken are reasonable, lawful, appropriate and economic.

2.1 Where collection of the debt is impossible, impractical or uneconomic, debts should be

written off with the minimum delay, in line with established accountancy practice, and the Council’s financial regulations.

2.2 In practice the feasibility of collecting a debt is influenced by many factors including; the

amount of the debt, the type of debt, the whereabouts of the debtor, the age of the debt and the debtor’s circumstances. In view of this wide range of factors this policy can only seek to establish an outline of the process to be followed in collecting each type of debt. In reaching a decision on the appropriate action in each individual case the authorised officers must also exercise their professional judgment.

2.3 This policy lists the actions to be followed in such debt collection and recommends time

scales and financial limits at each stage. As the types of debts are many and various there are specific actions available to the collector for some types of debts which are not permitted for others. These different options are highlighted.

Requirements 3.0 To comply with this policy, the administrative teams concerned shall in all cases:

a) Raise invoices which are clear and correctly addressed using the debtor’s legal title.

b) Only raise invoices which are reasonable, justifiable and bear scrutiny. c) Attend to all debts raised in a timely manner. d) Respond to each debtor promptly using an equivalent method of communication,

i.e. telephone, e-mail, face to face or in writing. e) Treat all debtors equally, without bias. f) Respond to debtors following the Council’s customer care guidelines. g) Listen to the debtor and ensure that all queries raised are addressed promptly. h) Ensure a record is maintained of all communications with each debtor. i) Take care to ensure that correspondence is correctly addressed and actions are

clearly explained without the use of jargon. j) Ensure that debtors with disabilities or language barriers are catered for

appropriately. k) Take action to locate debtors who have absconded. l) Apply receipts promptly and in accordance with the debtor’s instruction.


m) Investigate receipts that are unallocated and held on a suspense account. n) Ensure each action taken is appropriately authorised, recorded and that supporting

evidence and all documentation is maintained. o) Adhere to the Council’s financial regulations when passing debts for write off.

3.1 The Head of Revenues and Exchequer is responsible for ensuring the above

administrative requirements are fulfilled at all times. Procedures and Limits

4.0 The recovery process for sundry debts is laid out in the 2 flowcharts below. The first reflects the initial stages and the second the process when action is taken in the County Court. Before considering legal action all outstanding sundry debts for the same debtor are combined to make effective use of resources and minimise the court fees.

INITIAL SUNDRY DEBT COLLECTION PROCESS

OR OR

Invoice raised

First reminder letter

TRACING

Start Legal

proceedings in the

County Court

Second reminder letter

Stage 3 - Decision

Ask External Recovery

Officer to call at the

property

For commercial rents -

raise a warrant to

distrain and pass to an

external enforcement

agents to serve

WRITE OFF

Payment may be

received at any point in

this process


COURT PROCESSES This process does not apply to Housing Benefit Overpayments

No further action

Hearing will be set

Request judgment in default

Request judgment by instalments

7 day notice before action

Notice of Issue received

from Court - giving date

of issue. Debtor then

has 4 options: Admit Claim and

ask for time to pay

Judgment will

be entered or

claim struck

out

Claim form prepared

Claim form sent to

County Court with

cheque for court fee.

Ignore Claim

Pay in full

Warrant of execution

The court enforcement

agent will make regular

reports on progress. The

warrant is valid for 1 year

and can be suspended and

re-issued as appropriate.

Judgment entered and registered on Register of County Court Judgments

An arrangement can be made to pay by

instalments at any stage if the debtor is

unable to settle the debt, including any

fees/costs and interest in full. This can be

done in accordance with the usual

procedures.

Defend Claim

Charge on property

Only appropriate if the

debtor owns a

property. A Land

Registry search should

be undertaken to

establish legal title.

Attachment of Earnings

The debtor will be ordered to provide

employment details; the procedure is

dependent on the court being able to serve

documents on the defendant. The debtor is

ordered to complete a statement of their

financial circumstances. This may be a better

option to find information if the debtor does

not live in the borough as the order is served

by the court enforcement agents.

Order to attend court for questioning

This is not a form of enforcement but can be

undertaken at any time, post-judgment, to establish

the debtor’s circumstances which may help to decide

on the most appropriate enforcement action.

However, the order to attend must be served

ourselves so only appropriate if the address is within

the borough. Often, the threat of having to attend

court may prompt the debtor to make contact and

agree an arrangement. The order can then be

adjourned and re-issued if they default.

At all times the following information should

be considered:

The size of the debt

The age of the debt

The location of the debtor

The amount spent - v - the value of the debt

The debtor’s circumstances / ability to pay


The table below details the period between actions which allows the debtor sufficient time to respond to the previous request. Once action is taken in the County Court the number of days before the next stage is reached is prescribed by Court procedures.

Action Time from previous action

Invoice Promptly when the goods are delivered or the service performed

First reminder To be sent 14 days from invoice date

Second reminder To be sent 14 days from first reminder

Options: the following 4 options are available on an ‘either or’ basis

Pass to the external recovery officer Instruction to be passed 14 days from second reminder. The external recovery officer will call at the property, providing it is within the borough or in close proximity, within 14 days of receiving the case. A second visit will take place within a further 14 days and if unsuccessful the case will be returned to the sundry debt section without delay for further consideration. Larger value debts (over £250) will be prioritised. Small value debts will be grouped by locality and be dealt with whilst in the area.

Pass for trace The case details will be logged with the on-line trace system if the external recovery officer has been unable to find the debtor at the address held or other information is available to indicate no known address is held for the debtor.

Instruct enforcement agents

This option is only available, without a County Court Judgment, for the collection of commercial rent. A Warrant to Distrain will be completed and instruction to be passed to enforcement agents where it has been agreed with the property section that this is the appropriate course of action. Enforcement agents will be monitored to ensure they take action within reasonable time frame, in usual circumstances within 28 days.

Letter before Court action

To be sent 14 days from the second reminder or when the case is returned from the external recovery officer. This letter will warn the debtor of pending court action and state the fees and costs which would be added to the debt. It is at this point that all debts are combined before action is taken.

Issue a claim in the County Court At least 14 days after the letter before action

Respond to a defence Upon receipt

Enter judgment 21 days from date of issue, if undefended.

Enforcement action Within 14 days of the order of judgment being received from the court.

4.1 The following table sets out the level of debt below which it is considered uneconomic or inappropriate to carry out the specified action. The levels suggested are measured in terms of balance i.e. value of debt versus strength of recovery action and value of debt versus cost of recovery action. These levels will be reviewed annually or if the cost of taking action (i.e. administration costs or court fees) changes.


* The external recovery officer will only make visits within the borough or in neighbouring boroughs

due to travelling time. The officers’ safety is paramount and some areas are considered unsuitable for a lone officer to attend.

** This sum is based on the benefit regulations which in certain circumstance allow for a minimum deduction of £10.65 per week to be made from a housing benefit claim, and assumes a working person could achieve a similar level of repayment.

*** The fees are increased by 7.5% of the sum to be collected for amounts over £1,500

Action Lowest value of

debt

External cost of action

Notes

Issue of an invoice unless obliged to do so i.e. for ground rent

£20.00

Issue of automated reminder letters £20.00

Referral of debt to the external recovery officer within the borough

£50.00

Referral of debt to the external recovery officer outside the borough*

£100.00

Minimum instalment agreed under an arrangement to pay (per week)**

£10.00 See below

Referral of debt to an enforcement agent

Compliance stage

Enforcement stage***

Sale and Disposal ***

£500.00 £75.00

£235.00

£110.00

Fees are collected from the debtor

Referral of cases for trace £30.00 £1.57 cost per successful

search

Issue a County Court claim and enter judgment if undefended.

£250.00 £50.00 Court fee

Post Judgment enforcement options:

Order to attend court for questioning £300.00 £100.00 Court fee

Warrant of execution £150.00 £100.00 Court fee

Attachment of earnings £150.00 £100.00 Court fee

Charge on property £400.00 £100.00 Court fee stated plus

solicitor’s fees

Force sale of a property under a charge £5,000.00 Plus additional solicitor’s fees

Third Party Debt Order £3,000.00 £100.00 Court fee stated

plus solicitor's fees

Application to enforce an award following a housing benefit determination (O25, R12 form N322a)

£100.00 £35.00 Court fee

Deduction from Income Support or Housing Benefit £50.00 Due to amount of correspondence


Arrangements

5.0 Where a debtor makes contact at any point in the recovery process the Council will consider making an arrangement to pay by instalments where it would be unreasonable to expect full settlement due to the debtor’s circumstances. Regular instalments will be accepted weekly or monthly with payment by direct debit being the preferred method. If a debtor is unable to clear a debt due within a period of six months then a financial investigations form must be completed to substantiate their circumstances and the debtor will be asked to make an offer. The offer made and the circumstance of the debtor will be reviewed by the accounts receivable team leader to ensure equality and to maximise the amount paid. Where an arrangement will exceed three years, authorisation to proceed is required by the Head of Revenues and Exchequer.

Approved reasons for write off of debts 6.0 The following are recognised as valid reasons for the write off of debts.

a) The debtor is deceased and has left no estate or traceable executors. b) The debtor is formally insolvent. c) The debtor has absconded and cannot be traced. d) The amount is below the limits set out above for enforcement and action to date has

proved unsuccessful. e) The debtor is living outside the UK and is unlikely to return. f) The debtor is living in Scotland or Northern Ireland and it is uneconomic to transfer

proceedings to the appropriate court. g) The debtor is serving a prison sentence of sufficient length to make recovery

unlikely. h) The debtor is sectioned under the mental health act or undergoing a drugs

rehabilitation programme of sufficient length to make recovery unlikely. i) It is in the Council’s interest to agree a negotiated settlement for part of the debt, the

balance therefore is deemed uncollectible. j) The Court has not made an order in the Council’s favour at a hearing. k) If having review the debtor’s financial investigation form it is considered that to

enforce payment would cause the debtor extreme hardship, financial or otherwise, or it is in the interests of the Council or the wider community to write off the debt.

l) The debt is an overpayment of Housing Benefit which is not deemed to be recoverable in accordance with the Housing Benefit General Regulations 1987 and the Department for Work and Pensions overpayment guidance manual.

m) The age of the debt precludes recovery, or the debt is Statute Barred. 6.1 Debts will be written back and recovery action will recommence if the debtor is traced

or their circumstances change sufficiently to make this action reasonable. 6.2 A distinction must be drawn between court fees, solicitor’s costs and statutory interest

which are withdrawn because they were charged incorrectly and court fees, solicitor’s costs and statutory interest which are written off because they are considered to be


irrecoverable under the guidance of this policy. Where the costs are incorrectly applied then these will be withdrawn outside the area covered by this policy. Where costs are considered as irrecoverable they shall be treated in the same manner as the original debts for the purpose of this policy.

Approved reason for writing on credit balances 7.0 The credit has remained unclaimed for a period of 6 months and the customer cannot

be located. Involvement of Advice Agencies and other Stakeholders 8.0 The Council recognises the valuable role of local advice agencies in providing assisting

to local residents experiencing difficulty in managing debt. The Council have therefore consulted the local Citizens Advice Bureau and Hertfordshire County Council’s Money Management Unit on the content of the policy.


Appendix A Description of recovery processes.

1.0 Initial stages of recovery

1.1 Raising Invoices - All sundry debt invoices are raised via E5 the Council’s corporate financial system. They can be raised individually by the administrative assistants within each department providing the service or by the accounts receivable section via the automated process which produces invoices in bulk on a recurring basis. The accounts receivable section requires clear written instructions to set up or cancel such invoice schedules. Invoices must be raised using the correct legal name of the person or company to be charged and be correctly addressed, including a post code. Where the invoice is to be sent to a company the correct title and department will be quoted together with any order number supplied. A full and clear description of the goods or services supplied will be included on all invoices together with the agreed price and appropriate VAT charge.

1.2 Automated reminder letters – The E5 system produces two automated reminder

letters. The style of these letters fall into four categories: standard, commercial, sensitive and hostel rents. Standard letters cover the bulk of letters sent to private individuals, the first letter reminding them that the invoice is unpaid and the second pointing out the debt remains unpaid and if not settled in full the Council will take further action to secure payment. Commercial letters sent to companies use more formal wording but follow the same style. The sensitive letters are used for community care debtors and adopt a more gentle tone. Usually only one letter is sent in these cases and then a community care officer is notified if the invoice remains unpaid. The community care officer can then make a personal call to assist the debtor. The letters sent to collect hostel rent are tailored to this specific debt type.

1.3 Stage 3 – This is an automated reminder which is produced by E5. This is not

despatched to the debtor but alerts the accounts receivable staff that the debt remains unpaid and that further action is required. The options available are detailed below under next stages.

At any stage of the process outlined above, the debtor may settle the debt or make contact and query the invoice. Any queries are passed back to the originating department to be resolved and the recovery process suspended for a suitable period of time. With a straightforward query this would normally be 1 week. Where the query becomes protracted or goes to arbitration then this suspension is extended for a period agreed with the originating department. Where recovery action has been suspended the accounts receivable staff reschedule the recovery process in E5 to flag up the end of the period and resume the recovery process. The debtor may make contact at any time during the recovery process and request for time to pay. Instalment plans can be set up and monitored within the E5 system and are agreed taking into account the debtors circumstances and the value of the debt. Each officer within


the accounts receivable section can make an agreement if the debt can be settled within six months. Should a debtor need longer to pay they would be required to complete a financial investigation form, which is based on one used by the County Court, to substantiate their inability to pay sooner. Any financial form submitted is reviewed the senior officer, the team leader of the Head of Revenues and Exchequer. They are authorised to decide on a reasonable level of repayment for the type of debt based on the details provided. If the debt is considered uncollectible then it would be proposed for write off. If the invoice were incorrectly raised then instructions to raise a credit note would be required.

Next stages of recovery The actions detailed below are laid down to assist in assessing whether legal action is likely to be successful.

2.0 External recovery officer – The Council employs an officer to visit debtors who live within the borough to assess the reason for non-payment. This officer is not an enforcement officer and has no rights of entry or distraint. This officer can collect debts, make enquiries as to the whereabouts of the debtor, resolve misunderstandings, pass on queries to the correct department or discuss payment options. This officer can only be successful if the debtor is available or responds to a card left. The officer’s workload is organised by value and location. Where smaller debts are passed for collection then these will only be processed in batches when in the area or road in question.

2.1 Tracing – the Council uses an on-line trace system to verify the whereabouts of a

debtor.

2.2 Warrant to Distrain – This is only used for commercial rent collection. A warrant is completed and signed by the Head of Revenues and Exchequer and then passed to an external enforcement agent to be processed. Walking possession can be taken on goods to the value of the debt owed, including costs. The debtor has the option to settle the debt in full or by arrangement with the enforcement agent or to have the goods removed and sold to realise the value of the debt. Commercial rent is collected either monthly or quarterly depending on the terms of the lease. It is usual that at least 3 months’ or 2 quarters’ rent would be outstanding before this action is taken. Depending on the size of the property the debt would then be in the region of £3,000 to £10,000. The enforcement agent fees, as laid down in the Taking Control of Goods Regulations 2014, are paid by the debtor and the enforcement agent retains these before passing any funds collected to the Council.

Legal action in the County Court This is a brief description of the court process and the enforcement options available for sundry debts.


There is a fast track system to deal with housing benefit overpayment debts where the period allowed for appeal when the determination is issued is considered sufficient and the 21 days usually allowed between claim and judgment is omitted. The same enforcement actions are available under this system. 3.1 Letter before action – Each case being considered for legal action is checked to ensure

that the debtor has been correctly invoiced and is resident at the address given. Each case is also checked to ensure that two reminder letters have been sent previously and the debtor has not raised a query that has not either been resolved with an appropriate credit note being issued and allocated against the outstanding debt or been refuted clearly and in writing. Checks are made to ensure that the debtor has not raised any further query or requested any breakdown or meeting of interested parties which has not been provided. Searches are made ensure that all sundry debts owed by the debtor are included. Enquires are made as to any other debts owed to the Council and any action being taken to recover such debts. At this point a letter before action is sent advising the debtor that action will commence if the debt is not settled within seven days. The debtor is made aware of the specific amount of costs and interest which will be added to the debt if such action is taken.

3.2 County Court Claim - A claim is prepared for issue in the appropriate County Court.

Hertford Court has jurisdiction over the north and Edmonton Court covers the south of the borough. Particulars of claim are prepared by the accounts receivable staff giving the details of the debt and the exact dates of any action taken to recover the debt so far. All particulars of claims are checked by a senior officer before issue. The claim allows the debtor 21 days to settle the debt or put forward a defence and possible counter claim against the Council. Where a defence or counter claim is made the case is then passed to Legal Services for attendance at a court hearing. If the debtor makes contact at this stage, an arrangement to pay can still be made. Where no contact is made and the debt remains unpaid after the 21 days has elapsed further action is taken.

3.3 County Court Judgment (CCJ) – An application for judgment is made for payment of

the debt in full. No further enforcement action can be taken if a CCJ is not granted. A CCJ appears on the credit records of an individual and can make it difficult for that person to obtain a hire purchase agreement, credit card, mobile telephone contract, mortgage or a loan elsewhere. A CCJ can be lifted by the Council writing to the court should the debt be settled in full. This action is often requested.

3.4 Enforcement options:

a) Order to attend court for questioning – The case is always transferred to the nearest court to the debtor. The Court manager conducts the interview and asks standard questions. The Council have the option to submit questions or attend the interview. It is hoped that an arrangement to pay is achieved by this process. In some cases debtors are unwilling to attend court and give the details of their personal finances demanded. The court will give a date for attendance and arrange a second date should the debtor fail to appear. Failure to appear the


second time is considered contempt of court. The court can and often do impose a custodial sentence in such instances. Due to the number of debtors who fail to attend and the number of orders issued Council staff do not usually attend.

b) Warrant of execution – A court bailiff will enforce such a warrant where possible and where contact is made with the debtor. The bailiff is able to remove goods to the value of the debt plus costs but is restricted as to the type of goods on which they can distrain. There is little the Council can do if the debtor has insufficient assets or refuses to open the door. A warrant of execution can be issued for part of a debt. The Council can issue a warrant for £100 to see if the debtor can satisfy this warrant and then assesses whether a further warrant is a viable option.

c) Attachment of earnings – This order can be made where a debtor is in regular employment and receiving wages above a minimum living wage as specified by the Court. The Council will request the Court to issue an attachment order to the debtor’s employer. Unlike an attachment for council tax the amount paid is not a prescribed percentage of the debtor’s wages. The amount to be deducted is set by Council in relation to the debtor’s circumstances.

d) Charge on a property – A charge is placed on a property owned by a debtor which is then satisfied when the property is sold if sufficient equity is available after other charges have been settled. This option is can be used as security while the debt is settled in instalments. The sale of a property will not be forced for amounts less than £5,000.

e) Insolvency proceedings – This is not a course of action taken by the Council as it is expensive and gives no guarantee of securing the debt.

f) Third Party Debt Orders - A Third Party Debt Order is a tool to order someone, who either holds money on behalf of a debtor or someone who owes the debtor money, to pay the Council directly. The order has to be made for a specific day and the funds have to be available on that day. It is difficult to find out who owes the debtor money or where the debtor’s funds may be on any specific day and this option is therefore rarely used.

4 Guidelines to categories of write offs listed in Section 6 of the Recovery Policy

a) The debtor is deceased and has left no estate or traceable executors. Where the executor or next of kin has shown to the Council’s satisfaction that the deceased has left no estate with which to discharge the debt, the amount is put for write off. Where the estate is sufficient to pay only part of the debt the balance is proposed for write off. Where no executors can be traced any credit due is allocated to any other outstanding debt the debtor has or written on if there are none.

b) The debtor is formally insolvent. Where the debtor has entered into formal

insolvency the full balance of the debt shall be written off. However, in all cases a claim is submitted in the insolvency and where a dividend is paid the appropriate amount is written back onto the debtor’s account. Formal insolvency is defined as being subject to:


Compulsory, creditors’ voluntary, or members’ voluntary, liquidation

Bankruptcy

An individual, corporate or partnership voluntary arrangement

Administrative receivership

Administration by the High Court

Granting of an administration or composition order by the High Court or County Court

An insolvent partnership order

Note; the debts are only written off where all liable persons, companies, partnerships or partners are formally insolvent.

c) The debtor has absconded and cannot be traced. All reasonable steps which are

considered appropriate to the amount of the debt or credit are taken to establish the debtor’s whereabouts before the debt / credit is written off.

d) It is uneconomical to take action to enforce payment - Debts are written off where

it can clearly be demonstrated that:

The cost of enforcing payment will exceed the amount expected to be collected

The likelihood of enforcement action being successful is low and there is a clear risk that the costs incurred in enforcement action will not be recovered.

The policy states the appropriate level of debt for enforcement action. Where there are other sundry debts outstanding these are combined and action taken for both debts. This does not apply to Housing Benefit Overpayments which are recovered via a separate process.

e) The debtor is living outside the UK and is unlikely to return. Where it can be

demonstrated that the debtor is living outside the UK and is unlikely to return, the debt would be proposed for write off. If it is known that the debtor has identifiable assets in the UK i.e. property, then legal action would be taken to secure these assets where this is feasible. In the case of credits that have been unclaimed for more than 6 months, reasonable measures will be taken to establish the whereabouts of the debtor whether at home or abroad.

f) The debtor is living in Scotland or Northern Ireland and it is uneconomical to

transfer proceedings to the appropriate court. Where the debtor is living in Scotland or Northern Ireland and all recovery action prior to the issue of court proceedings has proved unsuccessful, debts would be proposed for write off. Where it is a large debt the feasibility of taking recovery action through the appropriate court would however be considered. The Council would need to instruct local solicitors to act of their behalf and the cost of this action would be a factor in this decision.

g) The debtor is serving a prison sentence of sufficient length to make recovery

unlikely. The length of a prison sentence is not always known and the debtor does not always return to this area on release. It is often difficult for ex-prisoners to secure work and therefore recovery of previous debts is unlikely. Each case needs to be viewed separately but an assessment would be made given the detail available.


h) The debtor is sectioned under the mental health act or undergoing a drugs

rehabilitation programme of sufficient length to make recovery unlikely. Similarly to (g) the periods of treatment are not always known. Disruption is caused to the debtor’s life, their ability to maintain accommodation, gain employment and so settle their debts. Each case needs to be viewed separately but an assessment should be made given the detail available.

i) It is in the Council’s interest to agree a negotiated settlement of part of the debt.

Where it can clearly be demonstrated that it is in the Council’s best interest to agree a settlement of less than the full amount of the debt the balance will be written off. Examples of when this category could apply are:

Where a sundry debt is disputed and it is likely that county court action will be defended causing additional time and cost to be expended.

Where it is more economical to accept a partial payment as full and final settlement than to pursue recovery action for the full amount over an extended period of time.

In giving consideration to the write off of debt under this category the authorised officer must have due regard for the Council’s fiduciary responsibility to the local community and tax payers.

j) The Court has not made an order in the Council’s favour at a hearing. Where an

action is defended and the court has not made an order in respect of the debt at a hearing, or has found in favour of the defendant and where it is not possible to amend or re-issue proceedings, the debt shall be written off.

k) It would cause the debtor extreme hardship, financial or otherwise, to enforce

payment, or it is in the interests of the Council or the wider community to write off the debt. In order for a debt to be written off for this reason a clearly documented case must be compiled to justify the decision to write off. In making a decision, consideration will be given to whether the debtor’s ability to pay is likely to improve in the next five years. The examples below are used as guidelines and are not considered to be exhaustive:

Where enforcement will cause severe hardship (e.g. where a debtor owes a substantial debt but is now reliant on state benefit).

Compassionate grounds e.g. where illness (including mental illness) or accident means that a debtor no longer has the means to pay a debt, or is not capable of managing their affairs

Where there has been a matrimonial break up, a partner has absconded, and the remaining partner does not have the means to pay a joint debt which accrued prior to the break up.

Where, following an assessment of the debtor’s ability to pay, the amount that the debtor can pay on a regular basis will not pay the full debt within five years, the debtor shall be required to make regular payments at an agreed rate. Their circumstances will be re-assessed regularly and before any debt remaining after the expiration of five years is considered for write off


k) The debt is an overpayment of Housing Benefit which is not deemed to be

recoverable in accordance with the Housing Benefit General Regulations 1987 and the Department for Work and Pensions overpayment guidance manual. This category applies to overpayments which have been identified, but where it is considered that they are not recoverable. An example would be an overpayment resulting from a local authority official error and where the person claiming benefit could not be expected to realise that an error had been made.

l) The age of the debt precludes recovery, or the debt is Statute Barred. This

category applies to those debts, which by their age may be precluded from recovery activity. The Limitation Act 1980 states that an action shall not be brought after the expiration of six years from the date on which the cause of action accrued, unless a part payment or acknowledgement of the debt by the debtor has subsequently been made, in which case the six years runs from the date of the payment or acknowledgement. In addition, other debts which are not statute barred may still be written off if their age makes it unlikely that recovery action will be successful. In such cases there may be a risk that the costs incurred in enforcement action will outweigh the debt and may not be recovered. This is because the age of the debt may have resulted in a lack of clear supporting evidence sufficient to support successful collection or recovery action.

m) The credit has remained unclaimed for a period of six months and the customer

cannot be located. Where efforts have been made to trace the customer but have been unsuccessful and a period of six months has elapsed since the credit arose.


Appendix B

policy for recovery of sundry debts...created on 21/08/2014 16:40:00 last updated 24/07/14 page 1 of...

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