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When everyone has a home

028 9024 5640: Housing & Debt Helpline for Northern Ireland

Adviser: Setting up repayment plans for rates arrears

Our Adviser recently helped a worried mechanic who was struggling with rates payments and facing legal action.

Michael had missed three of his scheduled domestic rates payments. Michael runs a small garage in rural Tyrone.  Business had been slow for some time and Michael had struggled to keep up with all his financial commitments. Although things had recently started picking up at work and he’d resumed his regular payments he hadn’t paid any money off his arrears and received a court summons regarding these.  The court papers stated that Land & Property Services was calling in the entire rates bill for the year, a total sum of £1300. Michael was really worried about this: while he could manage to pay a certain amount off his arrears each month on top of his regular payment, he wasn’t in a position to pay the full year’s rates in a lump sum.  He was panicking about the impact a court judgment would have on his business. 

Michael told us that he’d asked Land & Property Services to agree a payment plan to allow him to pay off the rates arrears along with his regular instalments.  He claims that he was told he’d have to pay a total of £150 a month and that this would be agreed after the court hearing as once the legal process had begun it could not be withdrawn.

Negotiating with Land & Property Services

The Housing Rights adviser, who was dealing with Michael, contacted LPS on his behalf.  The adviser was concerned that LPS staff seemed unable to negotiate an affordable repayment plan for Michael and that the agency was proceeding with legal action, despite Michael engaging with LPS acknowledging the debt and trying to sort out arrangements to repay. The adviser argued that

  • this inflexible approach was counterproductive to assisting a client repay an arrear
  • as a public body there was an onus on LPS to treat customers fairly and reasonably and
  • that court action should only be pursued where absolutely necessary.

Michael had clearly shown a willingness to repay his debt, so court action did not seem necessary in this instance.

Often, LPS will want a repayment proposal to ensure that the full debt is repaid by the end of the current rating year and this is how they came up with the figure of £150 per month.  After reviewing the case, LPS agreed to adjourn the court action and accepted a monthly repayment of £100. £77 of this would go towards Michael’s regular rates payment with the remainder going towards his arrears.  This arrangement would have to continue into the next rating year before Michael’s debt would be cleared.  

Having to pay £150 a month would have been a real financial stretch for Michael and he was worried about what would happen if he broke the terms of a repayment arrangement.  The lower amount of £100 per month posed a significantly reduced risk of a further default.  Michael was pleased that he would not now have to go to court and risk damage to his credit rating. 

Land & Property Services recovery guidance

Paying rates should be a priority.  Failing to pay can lead to bankruptcy and the loss of your home.  However, LPS Arrears & Recovery Guidance shared with Housing Rights states that “payment arrangments can be set up at any points of the collection process” so it is important to ensure that your clients are given an opportunity to agree a reasonable and affordable repayment plan.  When setting up a payment plan, LPS staff will look at the ratepayer’s payment history and if the account shows a history of default this will affect the recovery options that LPS will be able to offer.  If the ratepayer has broken more than one payment arrangment in the financial year, LPS will not normally agree to a repayment plan and will, instead, pursue court action to recover the debt.

Housing Rights can provide advice and representation to anyone struggling with domestic rates payments.

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Practical tips, Affordability, Adviser

This article was written on 22 September 2015. It should not be relied on as a statement of the current law or policy position. For help with housing issues please contact our helpline on 028 9024 5640 or use our online chat service at www.housingadviceNI.org.