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Dealing with Centrelink Debts

John lives in transitional accommodation and is unemployed. He is paid a Newstart Allowance by Centrelink. John receives a notice from Centrelink informing him that he has been overpaid and owes Centrelink money. The following scenario looks at the steps John should take.

What is a Centrelink debt or overpayment?
The notice to John advises that he has received money from Centrelink to which he was not entitled. This could have happened because:

• John provided Centrelink with incorrect information about his circumstances (such as his rate of income);
• John failed to provide information about a change of circumstances (such as the amount of rent he was paying); or
• Centrelink made a mistake in calculating John's payment.

However, just because Centrelink states that John has been overpaid doesn't mean that the decision to recover the debt is correct or that the amount of the alleged debt has been properly calculated. The first step that John should take is to obtain independent legal advice about whether he actually owes the debt and, if so, in what amount.

How can John repay the debt?
If the debt is properly raised, the amount is properly calculated and John is still receiving a Centrelink payment, the debt will be recovered by making regular deductions from that payment. Centrelink decides how much will be deducted from John's payment each week.

The amount should not cause financial hardship to John. If it does, or if John has special circumstances, he can arrange to reduce the rate of payment (ie pay back $10 per week instead of $20 per week), delay payment, or seek to have Centrelink waive or write off the payment.

Reducing the rate of payment
John's rate of payment should be reduced if it is causing financial hardship. To determine whether John is suffering financial hardship Centrelink may require him to provide information about his income and financial circumstances.

Deferring payment
John's debt can be deferred (usually for a few weeks or months) in the following situations:

• while Centrelink is investigating John's claim that there is no debt;
• while a payment arrangement is being negotiated; or
• when there is some short term crisis in John's life.

'Writing off' a debt
Centrelink can 'write off' a debt. This means that Centrelink will not follow up the debt for an indefinite or specific period of time. John's debt might be written off if he has no capacity to repay the debt (this may occur if John is suffering severe financial hardship or is affected by other factors, such as illness).

'Waiver' of the debt
Centrelink can 'waive' a debt. John's debt can be waived and will cease to exist if:

• it is less than $200;
• it was caused solely by Centrelink's administrative error (such as paying John too much even though he provided all of the information required);
• it is a result of John mistakenly underestimating the value of property that he owns;
• John is punished by Court for an offence that resulted in the debt (such as social security fraud); or
• John has special circumstances, such as ill health, and the debt did not result from him deliberately misleading Centrelink.

Unfortunately, financial hardship will not amount to 'special circumstances' unless it is particularly severe.

What steps should John take?
John should seek advice from his caseworker or a lawyer at the Clinic. Lawyers at the Clinic can assist John to:

• obtain a copy of his file from Centrelink;
• determine whether he actually owes the debt;
• negotiate a reasonable repayment scheme;
• organise for the debt to be written off or waived; and
• appeal against a decision of Centrelink.

[material sourced from Public Interest Law Clearing House web site]

 
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