Court fines and council tax are most common problem debt in UK

Magistrates’ fines and council tax bills are driving increasing numbers of people into problem debt, an advice charity said on Tuesday, as low wages and the increased cost of living squeeze household finances.

Also see Largest Debt Issue for Families  & Most Common Debt Problem

In 2014/15, 46,538 people turned to Citizens Advice because they were unable to pay court fines, a 39% increase on the figure for the previous year, according to the charity’s latest analysis of its cases.

The quarterly figure has been growing steadily over the past few years and, in the last three months of 2014/15, 13,400 new cases were recorded – up markedly on the 8,542 recorded in the same quarter two years earlier.

The increase in debts from court fines is a cause of concern for the charity. Magistrates courts can issue fines for offences ranging from speeding to not having a TV licence. The court can also impose a compensation order forcing payments to an injured party.

In its latest report on advice trends, to be published on Tuesday, Citizens Advice said it was hearing from more people who were unable to make these payments and faced enforcement, which could include possessions being taken by bailiffs.

Gillian Guy, the chief executive of Citizens Advice, said: “For people struggling with the day-to-day costs of housing and heating, it can be difficult to cover the cost of fines.

“The bailiffs who enforce the magistrate court fines need to recognise the difference between those who can’t pay and those who won’t pay when collecting money,” she said.

Problems with council tax debts also continued to rise, Citizens Advice said, with the number of cases handled by the charity increasing by 21% over the year, to 193,000.Council tax arrears have been the biggest single debt issue seen by the charity in England for two years, and have overtaken other debt problems in Wales, too.

It said an increase in arrears corresponded with the abolition of council tax benefit in April 2013 and its replacement with localised support, alongside low and irregular incomes.

Seven out of 10 clients who were behind with council tax payments had at least one other debt problem too. They were more likely than the average Citizens Advice client to receive housing benefit and more likely to be struggling with household bills including fuel debts, water bills and rent arrears.

Since mid-2013, more people have sought help for debts with households bills than those resulting from borrowing through loans, cards and other consumer credit.

“Citizens Advice’s new Advice Trends report highlights that people are still facing daily money worries and concerns about future finances,” Guy said.

“It also reveals Citizens Advice is seeing a shift in some of the types of issues people turn to us for help with. Although the number of people seeking help with consumer debts is down, many people still have day-to-day worries about paying bills and rent.”

Registry Trust, an organisation that keeps records of court judgments in England and Wales, said last week that, while personal insolvencies had fallen, the number of county court judgments (CCJs) issued to debtors had increased by 20% year-on-year in the first quarter.

It said 209,679 CCJs were recorded against consumers in England and Wales in the first three months of 2015 – the first time since 2008 that there were more than 200,000 consumer CCJs in the first quarter of the year.

CCJs are taken out by creditors against debtors, who must repay the sum owed by a set deadline. They remain on credit records for six years and can make it hard to take out loans.