Patience Iweta's council tax arrears of less than £2,000 escalated to a debt of more than £20,000 when she was forced to take out a huge loan to avoid losing her home.

Ms Iweta, 44, of New Cross, southeast London, lived in constant fear of having to disrupt her three young children and move house after Lewisham council applied for bankruptcy and repossession against her.

She told The Times yesterday: “It doesn't seem right that they can try and take your house from you for such a small amount of money. I still can't believe it. For less than £2,000. I can't think about it without getting very upset. My children are settled, they would hate to leave.”

According to Citizens Advice, the council filed for bankruptcy after Ms Iweta accumulated a council tax debt of about £1,900 in 2006. It planned to repossess her property, valued at £150,000 with equity of £92,000, to reclaim what it was owed.

Ms Iweta, originally from Nigeria, took out a bank loan to pay the council. However, her debt had reached £22,000 because of legal and other fees.

Having lost her job as a cleaner for a bank because of her financial situation, she defaulted on the bank loan - almost losing her home again. She is paying back the bank loan over an extended period but says that the ordeal was stressful and has stretched her well beyond her means.

Ms Iweta, who has a three-year-old girl and five-year-old twins, says that she did not receive council notices about her tax arrears because they went to the wrong address. She said that the matter could have been resolved long before it was necessary to issue bankruptcy proceedings.

“It has been a horrible experience. I have lost faith in the system. It does not work for people like me. The council are supposed to be there to help and support you. I got off income support and saved money to buy my home but it was nearly taken from me. I still worry that it will be. I really liked my job, I was happy, and now there is no work. It is very difficult.”

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