Credit Score Basics > Does a liability order affect credit?

Does a liability order affect credit?

Wollit Team2 minute read · Updated 17th September 2024

In the UK, a liability order is a way for local councils to collect unpaid debts, especially council tax. If you find yourself facing a liability order, here is how one works and how it might impact your credit score.

What is a liability order?

A liability order is issued by a magistrate's court when you haven’t paid your council tax. Here’s how it works:

• If you don’t pay your council tax after getting reminders, the council can ask the court for a liability order. This means they take you to court to get permission to collect the money you owe.
• Once the court grants the liability order, the council can use stronger methods to recover the debt. This could include sending bailiffs to your home or taking money directly from your wages or benefits.
• If a liability order is issued against you, you'll also have to pay extra costs like court fees.

Will I go to jail for not paying Council Tax?

In England, failing to pay council tax can lead to serious consequences, including imprisonment for up to 90 days in extreme cases. While this does not directly affect your credit score it can be distressing and can have significant financial implications.

Can I dispute a liability order?

Yes, you can dispute a liability order. If you think there’s an error in the amount owed or that you shouldn’t be responsible for it, you can attend the court hearing and present your case. It’s important to act quickly and communicate with the council about any disputes.

What happens if I manage to pay my debt after a liability order is issued?

If you pay off the debt after a liability order has been issued, it won’t affect your credit score either since liability orders themselves aren’t recorded as CCJs.

How could a liability order affect my credit score?

First of all, a liability order is not the same as a County Court Judgment (CCJ). While CCJs are recorded on your credit report and can hurt your credit score, liability orders do not automatically show up on your credit report.

This means that they do not directly affect your credit score.

However, even though a liability order itself doesn’t show up on your credit report, ignoring it can lead to actions that might affect your credit. If you ignore the liability order and don’t pay what you owe, the council may send bailiffs to collect the debt. This can lead to extra fees and complications that could hurt your finances. This might indirectly make it likely for you to miss other payments – ones that could affect your credit score.

Plus, if you keep ignoring payments and if debts remain unpaid for too long, the council could apply for bankruptcy against you. Bankruptcy has serious consequences for your credit score and can stay on your record for up to six years.

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