What Care Home Operators Can Do When Residents Stop Paying for Care

Care homes are required to provide care for their residents, so when residents are unable to pay the fees, operators find themselves in a difficult position. It’s crucial to recover fees to maintain cash flow and operate a sustainable business, ensuring that care can continue at the right level. However, withholding care to achieve this is clearly not an option.

There is a growing trend of operators securing a charge over residents’ property to protect against future non-payment, but this approach carries its own legal and regulatory challenges.

Why non-payment happens

It’s not uncommon for residents to miss payments, whether intentionally or otherwise. This makes it critical for operators to understand what options are available when faced with this situation. It’s also important to implement policies that minimise non-payment cases while upholding their duty of care.

First steps: understanding the reason

When faced with non-payment, the first step is to determine why the resident has missed a payment. Is it an innocent mistake that will soon be corrected, or is there a deeper issue? This due diligence helps operators establish whether funds will arrive later, or not at all.

If a privately-paying resident can no longer afford care, alternative funding options may be available, such as through the local authority.

Preventative measures

Care home fees can be significant, so operators should assess whether a prospective resident can afford care before admission. If they cannot, alternative funding routes should be explored.

Extensive due diligence is essential to understand an individual’s financial position and risk level. Maintaining open communication with residents and their families from the outset helps clarify payment expectations and address delays promptly.

Robust terms and conditions in contracts also provide protection and discourage non-payment.

If non-payment does occur, swift action is vital. Delays can lead to mounting debts, which can be extremely detrimental for operators in an already stretched sector.

Options for securing payment

Operators can consider measures to protect themselves. such as third-party guarantees from family members, or securing a charge over the resident’s property, which is often their most significant asset.

A charge can be agreed voluntarily before care begins or obtained later through a court order if payments remain outstanding. However, this approach is complex and regulated. Care homes may be treated as lenders, triggering compliance obligations under consumer credit laws. Failure to follow the correct process can result in serious legal consequences, including fines or even criminal liability.

Alternatively, a charge can be secured by way of a charging order, later down the line. This is where an operator takes the resident to court on the grounds that the individual hasn’t upheld their contractual obligations by defaulting on payments. The operator can obtain a court order requiring the resident to pay. If any court order isn’t then paid, a charging order can be applied for and issued by the court which the operator can then register against any property. This allows the operator to secure their debt and later recover the outstanding payment when the property is sold.

Handling sensitive situations

These matters often involve vulnerable individuals and can be highly emotive. Clear communication, transparency about timelines, and sensitivity throughout the process are essential to avoid complaints and maintain trust.

Key takeaways

Operators should be aware that they have options when dealing with non-paying residents. Implementing pre-emptive measures and fostering clear communication before admission can help prevent issues. If non-payment occurs, having a clear action plan and seeking specialist advice is crucial.

How we can help

Our team advises care home operators on all aspects of fee recovery and contractual protection. From drafting robust agreements to guiding you through complex enforcement options, we provide practical, compliant solutions tailored to your needs.

Get in touch to discuss how we can support your care home in managing financial risk while continuing to deliver exceptional care.