Which Very Common Debt Isn’t On Your Credit Record?

This is a guest post by Sara Williams who blogs about everything to do with debt and credit ratings at Debt Camel.

It’s natural to assume that all debts, or at least the important ones, will show on your credit file. There are three credit reference agencies in Britain – Experian, Equifax and Call Credit – so if you check your credit records at all three, you expect to get the full picture… But if you have got behind with your Council Tax, this isn’t there!

Why is council tax missing?

The sorts of debts that are recorded on credit records are “regulated” debts. These include consumer debts such as credit cards, catalogues, loans, overdrafts, HP, mortgages etc. And there are also utility and other household bills such as electricity, water, mobiles.

But tax debts and other “government” debts such as benefit overpayments, don’t get reported to the credit reference agencies. And this includes council tax arrears, which was a major cause of debt problems for millions of people in 2016:

  • Citizens Advice say it has overtaken credit cards as the most common debt their clients have;
  • StepChange say a third of their clients have serious council tax arrears.

You can’t get a CCJ for council tax debt

You might expect that if your council takes you to court for council tax arrears, the resulting CCJ will appear on your credit record. But it doesn’t, because technically you get a Liability Order, not a CCJ, and Liability Orders aren’t reported to the Credit Reference Agencies.

But it’s still a “priority debt”

It would be a big mistake though to decide it’s more important to pay your credit card than your council tax. Council Tax needs to be treated as a priority because you can get sent to prison for not paying it… and that can’t happen with any consumer debts – loans, catalogues, credit cards, overdrafts etc. And more than a thousand people a year are made bankrupt by their local council for council tax arrears.

There is also an incredible practical reason why council tax should be one of your top priorities. Local Authorities are faster to take court action and then send in the bailiffs than any bank, credit card, catalogue or payday lender.

And each stage adds more costs to what you owe. Liability Order costs are often over a hundred pounds. Bailiffs charge you £75 just for writing you a letter saying they are handling your debt. If you can’t make an arrangement to pay it then and the bailiff comes to your house, that’s another £235. So an initial council tax debt of only a hundred pounds can jump to over five hundred pounds within a few months.

So if you don’t want to deal with bailiffs or have a debt escalate alarmingly, council tax needs to be paid, even if that means you can’t pay non-priority debts.

If you aren’t sure what the most important bills and debts are, or how to cope if you have problems paying these, see What are priority and non-priority debts? for details.

Thinking Thrifty

Thinking Thrifty

David Naylor is the editor of the Thinking Thrifty blog. An award winning personal finance and lifestyle blogger, he shows how it is possible to live extremely well for less.
Thinking Thrifty
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2 thoughts on “Which Very Common Debt Isn’t On Your Credit Record?

  1. Its the most common question asked; “will this council tax debt affect my credit?”. You should know that there are suggestions to supply Registry Trust with liability order details. Not sure if it will happen but is it a bad thing? Why should a creditor not be able to see the full picture?

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