Debt charity StepChange has generated a huge amount of publicity by claiming that councils have been using overly aggressive tactics when pursuing arrears. While there is always the need to improve on collection tactics – a fact illustrated clearly by the fall in collection rates in 2013/14 – we must also take the time to understand the reality of debt collection.
Facing the facts
Let's start by addressing the stats. StepChange said that 62% of its clients were threatened with court action. This isn't necessarily a surprising headline figure since we can assume that those clients are people who are struggling with debt, and have either ignored or been unable to meet their council tax requirement. While it may seem shocking that such people are threatened with legal action, the truth is that many individuals ignore the multiple letters sent by councils once tax payments fall into arrears.
This issue has been further compounded by the legal changes of April 2013, which passed the handling of council tax benefits to local authorities and dramatically slashed their budget. A report from The Institute for Fiscal Studies found that there had been a jump of 30-40% in people who previously had no council tax to pay seeking help from Citizens Advice.
What this shows us is that there is a genuine misunderstanding of both the responsibilities and rights of council tax paying citizens. Ironically, charities like StepChange and Citizens Advice may not be helping councils by taking this aggressive stance on councils' attempts to recoup debt.
Both sides could benefit from an increased focus on disseminating information to council tax payers to ensure that they know how and when they must pay, and what to do when they feel unable to do so. Similarly, bailiffs should make a concerted effort to advise and assist debtors, working towards an affordable payment plan rather than threatening court or enforcement action.
Ways and means
One way to improve may be to trial innovative engagement methods. Being active on social media is an excellent way to educate on debt issues, as Plymouth Council did to great effect with an anti-loan shark campaign earlier this year. What's more, both councils and bailiffs could work harder to make use of mobile technologies to engage audiences.
As it stands, bodies like Citizens Advice are occupying a worrying space in which they place themselves as a kind of "middle man" between debtors and those to whom they owe money. The fact is that debt advice charities should exist to help people manage finances and, where necessary, obtain legal assistance: not fight off legitimate claims for money.
If we can directly engage audiences, we can cut out this troublesome positioning to the benefit of everyone. Starting with genuine, open attempts to contact debtors, we should make every effort to be approachable, and make positive, useful suggestions that work towards an affordable repayment plan for both parties. In the long run, that will even make the thick end of enforcement action far more effective, instead of falling into negative media campaigns that undermine their impact.
Contact Dukes Bailiffs today for an ethical way to collect your debts.