South Tyneside Council calls in debt collectors to deal with rent and tax arrears
South Tyneside Council has instructed a debt collection agency to claw back rent and council tax arrears. The council authorised the contract in the week commencing 12 June 2018.
About South Tyneside Council’s debt collecting problems
The debt collection agency will deal with everybody in the area who defaults on paying their bills and will collect cash on behalf of the council and South Tyneside Homes.
A council spokesperson has said: “This will be done even where it would not be cost effective,” so the cash may be used for debts which are traditionally classed as non-priority, which could include business rates.
Councillor Ed Malcolm, who is a cabinet member for resources and innovation and also the chairman of South Tyneside Homes, said that debt collection agents were “an important tool” in getting to grips with this issue. He was speaking while at the Town Hall on Wednesday, 14 June and commented that debt collection would be a “last resort” or it would be used if “other methods have been unsuccessful””.
£2 million is owed by 1/3 of tenants
Last October the South Shields housing department confirmed they were attempting to get back £2mn that was owed by more than one-third of their 18,000 tenants – an average of £285 for each tenanted household. In 2017 there were 3,000 cases referred to a collections agency, with 40% of these resolved with no need for physical visits from enforcement agents.
The council say that they collect 9% of council tax and business rates debt at present, which totals £90mn annually. A spokesman also said that use of debt collection agents has been cut now that all tax payers have a lot more flexibility over their methods of payment, amount and frequency. He said: “Though we rigorously pursue debts, we’re of course concerned when people fall behind with payments and would urge anyone in this situation to contact us as soon as possible so that we can explore flexible repayment arrangements that take people’s circumstances into consideration.”
No added charges for South Tyneside Council
Any new collections agency can get back their costs via charges which are passed on to the debtor, so South Tyneside Council will not be facing any added charges.
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