Falling behind with council tax payments by only a few hundred pounds is increasingly tipping people towards bankruptcy as many town halls adopt a tougher approach to debts.

With council tax bills doubling since Labour came to power, more homeowners are struggling to meet monthly payments and are falling into debt.

Faced with a recession and budget squeezes, councils are increasingly using bailiffs and insolvency practitioners to get their money more quickly than by more conventional methods, The Times has learnt.

Such moves can push struggling families deeper into debt as they are forced to pay back arrears plus thousands of pounds in debt-collectors’ costs.

Once bankruptcy proceedings are initiated, people can face bills of up to £50,000 in insolvency and legal costs, even though their original debt might have been little over £750. Some are forced to sell their homes to meet the costs.

Town halls are under huge pressure to meet targets set by the Government and the Audit Commission to raise the proportion of council tax they collect.

Giles Hindle, an insolvency and corporate recovery partner with Beachcroft, the law firm, said: “What they have cottoned on to in recent years is that bankruptcy offers the most immediate prospect of recovering unpaid council tax.

“They have found it the most effective tool for recovery.” Last year councils collected 97 per cent of the £20.6 billion tax due, a rate that has risen steadily in the past few years.

Figures obtained under the Freedom of Information Act requests by the Liberal Democrats have exposed how aggressive some councils have become in chasing their debts.

Responses from 171 out of 370 councils show that 1,706 householders were the subject of bankruptcy proceedings last year for failing to pay council tax arrears.

Bailiffs were deployed to chase up payments in 600,000 homes by seizing goods if necessary — although they are not supposed to seize essential items such as cookers, fridges and beds. Watchdogs such as Citizens Advice also report a sharp increase in the number of people taken to court over council tax bills, with a 13 per cent rise in calls about arrears and court or bankruptcy proceedings in the past six months.

Peter Tutton, debt policy adviser for Citizens Advice, said that bankruptcy orders were used too often against vulnerable people for relatively small council tax debts.

“Even more people on low incomes are struggling to pay their council tax bills and some of the best councils are doing all they can to help when people are in difficulty,” Mr Tutton said. “But too many are still sending in bailiffs indiscriminately, without taking account of people’s individual circumstances.”

Earlier this year the Local Government Ombudsman found a council acted unfairly after being too aggressive in chasing arrears. Wolverhampton City Council made a resident bankrupt for failing to pay £1,105 in council tax but, after the official receiver was called in, he was faced with costs of £38,000. The ombudsman ruled that the council did not take adequate steps to inform him and that it should have chosen an alternative method to recoup the cash.

Some of the more aggressive debt-chasers last night defended their actions. Sandwell Metropolitan Borough Council, which filed for bankruptcy in 46 cases, claimed that it had a legal duty to chase arrears.

Steve Eling, Cabinet member for strategic resources at the council, said: “We’re an extremely deprived borough with an increasing level of unemployment at the moment.

“If people find themselves with bankruptcy petitions, it means they owe monies over several years. We take a hard line with those people — not doing so would be grossly unfair on those who do pay.”

In Brent, bailiffs have visited more than 13,000 households and brought bankruptcy procedings against 93 households. A council spokesman said that it had given almost 300 residents extensions to pay their bills.

How to get your money back . . . or not

— Initially, a town hall should send out several warnings and ask debtors to pay in instalments

— If debts are not paid, a court summons can be issued. A council can then seek a liability order, which allows deductions from earnings or benefits

— A charging order can be made if the arrears are more than £1,000. Cash can be recouped only when a home is sold

— Bailiffs can be sent in to seize household goods

— A bankruptcy order can be applied for as a quicker way of chasing debt and can be used if it is more than £750

— Once the court issues a bankruptcy order, the council can appoint insolvency practitioners

— They take over the debtors' assets and can force a sale of a house. Their costs, which have to be paid by the debtor, can amount to £50,000. Some debtors take out a loan to avoid selling their home

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