Former Tenants Arrears

Former Tenants Arrears

Former Tenants’ Arrears

Recovery Procedure

1. Introduction

This procedure covers the pursuit of housing rent arrears that are outstanding following the termination of a tenancy. It should be read in conjunction with the Council’s corporate write off policy and corporate debt recovery policy. The term Former Tenants’ Arrears (FTA) is used throughout this document to represent all outstanding balances. It should however be borne in mind that this term also covers the many former tenants’ accounts that are in credit.

We have entered into partnership with Rossendale Collect Ltd (RCL) for the recovery of FTA. Cases are passed to them by the Rent Income team. RCL’s customer number is 08456 444499.

RCL will send a letter of introduction informing the former tenant that an invoice has been raised on behalf of Six Town Housing. They will chase the debt using up to 4 letters and telephone calls. They handle all payments and payment plan monitoring on our behalf. The Rent Team deal with disputes over the amount of arrears owed (see section 12 below)

After 4 letters have been sent, the case is either written off or referred back to RCL for doorstep collection. Rent Income will decide whether to refer back to RCL or recommend write off.

2. Prior to Termination

The following actions should be taken by Customer Services Advisors immediately after receipt of notification of a termination:

1 The tenant should be advised of any amount owing, and the amount that will be due upon the termination of the tenancy. The tenant should not be told that the account will be clear as there is the possibility of further adjustments after the account has closed e.g. Housing Benefit. This can cause complications at later recovery stages, and may cause distress to former tenants.

2 The tenant’s forwarding address & contact number/s should be obtained and noted on Simdell.

3. New FTAs

A list of new FTAs is checked by the Rents Team every week. Check the account for any notes, confirm the forwarding address and check for any credits which can be transferred to other debts e.g. rechargeable repairs, Council Tax.

On each new FTA account, and request that any adjustments be made quickly. Accounts should be progressed to stage 1 on Libra Client. A list of terminations is produced nightly and sent to the Housing Benefit section to inform them of any account closures to ensure prompt action is taken to avoid any overpayments and ensure any adjustments are done promptly to accounts.

If the tenant is considered vulnerable through mental or physical illness, age or other personal circumstances there may be valid reasons not to pursue the debt. A definitive list is contained within the Council’s corporate debt policy. In such cases, Social Services or other care provider should be contacted to see if they are able to provide any assistance. If the officer is aware of such cases, they should be discussed with their Rent Co ordinator prior to any recovery action being taken. If it is decided not to pursue the debt, a full note should be made on the Libra Client notepad giving reasons why.

If the tenant has died, the status on Simdell should be changed to 4 and the appropriate standard letter sent. (see section 10 below)

If an account balance is less than £10, no further action should be taken at this stage and the case recommended for write off as described below in section 9.

Note that at this stage no further action is to be taken if regular payments are being made.

4. No forwarding address

The weekly FTA list identifies accounts where there is no forwarding address. In such cases, the status on Libra Client should be amended to stage 10. Enquiries should be made via Council Tax, Community Housing section, Rent Advisor and/or house file to ascertain whether or not further information is available relating to the forwarding address. The Council’s corporate write off policy outlines the steps which must be taken to try to trace tenants. If after 3 months no forwarding address has been traced, these cases can be identified by running a query against code 10 in Libra Client. They should then be sent to Rossendales Collect Ltd (RCL) for trace, and the Simdell status changed to 7.

5. In House letter

If no Housing Benefit adjustment is likely and the debt owed is over £10, a letter 1, account statement and a payment card should be sent out

All other cases over £10 should be sent a letter 1, account statement and payment card when Housing Benefits have finalised their adjustments. Any overpayments on accounts will have to be manually adjusted by the Finance/Income section at the Town Hall. Upon notification by Housing Benefits that an overpayment is recoverable from us, the Rents Team will arrange for the necessary adjustment to be made from Simdell to IBS. A standard report will be provided weekly. The Admin Officer FTA will be given a copy of the report and should make a note on Simdell of the details of the overpayment.

In order to send letter 1, the account should be manually progressed to stage 6 on Simdell. If the former tenant makes an agreement to pay, note the arrangements on the Simdell notepad and change to stage 4.

6. Collection Agency

All cases owing over £10 where the tenant has not died & where the in house letter has been sent should be checked after 2 weeks. If satisfactory regular payments have not been made, then these cases should be moved to stage 11. If satisfactory regular payments have not been made passed to RCL for further pursuit, subject to the vulnerability checks described above.

RCL will attempt to recover payment of the FTA on our behalf by sending letters. If they are unable to recover the FTA, and provided the debt exceeds £50, they should be authorised to pursue door step collection. If less than £50, the case should be recommended for write off as uneconomical to pursue.

When the account is to be passed to the collection agency for letter collection, it should be manually progressed to stage 7 on Libra Client. Lists for the agency should be prepared on a weekly basis by requesting information from Libra Client then sending an Excel file to RCL. If authorisation is given to pursue doorstep collection, this should noted on Libra Client notepad.

If the agency is still unable to collect via doorstep action, they will return the case to us as uncollectable. Where a case has been returned as uncollectable, it should be recommended for write off unless there is a good prospect of recovery via the County Court. Each case should be reviewed at this stage, but given the costs, the poor collection rate historically and our previous efforts to collect, it is unlikely that large numbers of cases would be passed for legal action. See below for guidelines on referral to Court.

If a former tenant contacts Six Town Housing to make arrangements to repay a debt following a letter or call from RCL, they must be referred back to RCL. Only in exceptional circumstances should we make an agreement if the case has gone to RCL. The customer can contact RCL on 08456 444499.

7. County Court

Cases should only be passed to Legal Services for recovery through the County Court where there is a realistic prospect of payment (see above). Each case must be assessed on its merits, but in view of the cost clearly there is little point in passing a case through where a collection agency has failed to collect or where there is no forwarding address. However, if we are aware that the former tenant has sufficient income to repay the arrears but is refusing to do so, County Court proceedings can be considered.

When the account has been passed to Legal Services, it should be manually progressed to

stage 10 on Simdell.

Cases that have been processed via County Court and on which judgement has been granted should have the appropriate fees and costs added to the debt, and be monitored on a monthly basis to ensure that regular payments are being made. Distraint (seizing goods) or an attachment of earnings can be considered provide we have a judgement allowing us to do so. However, this should only be considered where the tenant is known to be in employment and is refusing to pay as described above.

Where satisfactory regular payments are not being made, the opinion of the Rent Co ordinator should be sought as to the most appropriate course of action, but it is likely that the debt would be recommended for write off.

8. Recommending for Write Off

Before writing off is recommended, cases should have followed the procedure outlined above appropriate to the size of the debt and the tenant’s circumstances. If write off is recommended, the case should be progressed to stage 9 on Libra Client. A notepad entry should also be made on code FWO, with the system date in the appropriate field. A code from 2-14 should be entered in the “Notes” field as per the attached list. It is important to remember that no text should be added in the field as the system will not recognise the write off code when it is interrogated.

If the former tenant is eventually traced or makes an offer to pay, the debt can be written back on. If a former tenant contacts us, a check should be made on Libra Client to see if they have a written off debt. If they do, take the details of the person’s new address and make an arrangement to repay the debt. Notify the Finance Team of the details so that the debt can be written back on.

9. FTAs in Credit

A list of accounts that have either gone into credit, or where the credit amount has increased, should be run weekly by the Rents Team of Six Town Housing to identify where a refund may be required. This list should checked and instructions passed to the Finance Team if a refund is required.

The Rents/Finance Team should check that the former tenant does not owe any money in respect of any new current rent account, or for any rechargeable work that has been carried out.

The Rents Team should then make contact to the former tenant advising that they have a credit, and request bank details and to confirm that the forwarding address is correct.


10. Deceased Former Tenants

A statement should be sent to the executor or the next of kin together with a standard letter. This is produced by progressing the case on Simdell to stage 4. The case should be recommended for write off if proof is provided that there is no estate to recover the debt from.

Cases should be reviewed on a 2 weekly basis & further recovery action will only be taken where there is reason to believe that the deceased former tenant’s estate has assets and the executor is avoiding settling the account. In such cases, advice should be sought from the Council’s Legal Services on the best way to proceed.

11. Write Off of FTA

On a monthly basis, reports should be requested as necessary by the Rent Coordinator to identify which accounts should be put forward for write off.

Separate lists should be prepared, one for amounts up to £2,000, which should be passed to the Head of Customer Support and Collections. A list of cases between £2,000 and £5,000 should go to the .Director of Finance and e-Government for approval. A final list, for amounts over £5,000, should be included in a report to Executive via the Director of Finance and e-Government.

12. Disputed accounts

If the customer is disputing the size of the debt or the period for which it has been charged, Six Town Housing should deal with this. The Rents Team should deal with queries relating to how a debt has accrued or disputes over the size of the debt. The voids team should deal with queries relating to tenancy start/termination dates.

The Rents Taem will liaise direct with RCL regarding any disputes or queries which the former tenant has raised with them.