Torbay Council has been urged to pay £25,000 compensation to a resident it improperly made bankrupt.
The unusually high payment was recommended by local government ombudsman Jane Martin after ‘Mr Castle’, who has mental health problems, was bankrupted over an unpaid council tax bill.
Although that bill was for only £2,248, he incurred legal costs of £24,000.
Ms Martin said a bailiff who visited him “noted warning signs that might reasonably have alerted the council to the possibility that the debtor was unwell” and warned that Mr Castle appeared to be suicidal.
“In making decisions about debt recovery, I expect that council officers should make reasonable efforts to contact the debtor in person,” she said.
The council had difficulties engaging with Mr Castle, who was known to leave post unopened, but he was not visited by officers.
He complained that Torbay took bankruptcy proceedings without having proper regard to his circumstances, in particular his mental health.
Ms Martin said councils could properly use bankruptcy but “the impact on the individual debtor should be taken into account”.
She said Torbay failed to document its decision making, and failed to reconsider when told that Mr Castle might be suicidal.
A Torbay spokesman said: “Torbay Council has received the decision of the Ombudsman, regarding this case, which dates back to May 2008, and is currently considering its response.”