In a report the ombudsman Dr Jane Martin said a bailiff had noted warning signs that might have alerted the council to the fact that the debtor, described as ‘Mr C’, was unwell.
Dr Martin said the council’s failure had serious consequences because the debtor had incurred costs of £24,000.
She added: “In making decisions about debt recovery, I expect that council officers should make reasonable efforts to contact the debtor in person.”
The council had difficulties engaging with the complainant and it was known that he did not open his post but left it to accumulate over a long period.
But the LGO report found that none of the council’s own officers visited Mr C at home. The bailiff advised the council’s solicitor that Mr C was suicidal.
Mr C complained that the council took bankruptcy proceedings against him in response to a council tax debt of £2,248, without having proper regard to his personal circumstances, in particular his mental health.
The ombudsman added: “I recognise that, having obtained liability orders and having tried to collect its debts through the use of bailiffs, the council was short of options as to how it could collect the money it was due.
“It is clearly not the case that bankruptcy should never be contemplated, but the consequences bankruptcy can impose upon a debtor are severe and in selecting options for recovery the impact on the individual debtor should be taken into account.”
The ombudsman said she did not believe the council followed due process in making Mr C bankrupt. She found that the council failed to document its decision making in respect of the recovery action by way of bankruptcy.
She also said the council failed to reconsider its decision to pursue bankruptcy when information came to light that Mr C might be considered suicidal.
Had such failings not occurred, Dr Martin added, then the council would not have continued with bankruptcy proceedings against Mr C and he would not have incurred the high punitive costs of some £24,000 associated with that action.
A spokesman for Torbay Council said: "The council has received the decision of the ombudsman regarding this case which dates back to May 2008. The council is currently considering its response. The council has three months to do this."
The ombudsman recommended that the council issued Mr C with a formal apology and paid him £25,000.