Council Tax: recovery of non-payment

Bankruptcy and insolvency process

Bankruptcies and insolvencies

Bankruptcy is essentially a declaration to your creditors that you cannot afford to repay your debt.

If you or your company owe more than £5,000 in Council Tax or Business Rates, and you have been summonsed, we may start bankruptcy or liquidation proceedings against you.

If we take this action, we will pass your account to our solicitors who will send you a statutory demand. A statutory demand gives you 21 days to pay us the full amount.

If you receive a statutory demand, you should contact our solicitors immediately.

If you do not settle the statutory demand, we will present a petition for bankruptcy or liquidation to the County Court.

Frequently asked questions

Q. What happens if a bankruptcy order is issued against me?


  • Your home could be sold to pay your debts 
  • Your bank accounts will be frozen 
  • The official receiver will investigate your affairs 
  • May not be able to obtain credit for over £500
  • If you are declared bankrupt, the official receiver will control your spending for three years.


Q. What happens if a liquidation order is granted against my company?


  • You could be forced to sell your home 
  • Your company will be wound up by the official receiver
  • Your personal bank accounts could be frozen
  • You will not be allowed to be a company director

Q. How will I be made bankrupt?

A. The County Court can make a bankruptcy order after a bankruptcy petition has been received.

A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun.

Q. Is bankruptcy advertised?  

A. Bankruptcy is always advertised.

Q. What does the Official Receiver do?

A. The Official Receiver is responsible for looking into your financial affairs for the period before and during your bankruptcy. He or she may report to the Court and has to report to your creditors. The Official Receiver must also report any matters which indicate that you may have committed criminal offences in connection with your bankruptcy, or that your behaviour has been dishonest or you have been in some way to blame for your bankruptcy.

Q. What happens to future assets?

A.  Any asset that might have been acquired during the term of the bankruptcy, such as inheritances, insurance payouts/maturities, will all be lost.

Q. What happens to my assets?

A. You will no longer control your assets. You can keep the following items unless their individual value is more than the cost of a reasonable replacement:

Tools, books, vehicles and other items of equipment which you need to use personally in your employment, business or vocation, clothing, bedding, furniture, household equipment and other basic items you and your family need in the home. All these items must be disclosed to the Official Receiver who will then decide whether you can keep them.

Q. What happens to my home if I have a family?

A. The Official Receiver will still take your home unless your partner can prove they have an interest in the property. If this is the case, the Official Receiver will allow your partner to purchase your share of the equity. If they are unable to do this, the Trustee in Bankruptcy will, after 12 months, have the right to obtain possession and subsequently issue an eviction order.

Q. What happens to my wages?

A. Your trustee may apply to Court for an income payments order (IPO), which required you to make contributions towards the bankruptcy debts from your income. The Court will not make an IPO if it would leave you without enough income to meet the reasonable domestic needs of you and your family. If you have an increase or decrease in income, the IPO can be changed.

Q. What will happen to my job?

A. Certain employment situations will be prejudiced by being declared bankrupt, and professional and business status will be lost. Membership of some associations and societies may also be lost.

This is a general guide to Council Tax and bankruptcy legislation and is not a substitute for the relevant statutes and regulations. Those customers facing potential bankruptcy are advised to take independent legal advice.