What to do if you receive a Centrelink debt letter
When Centrelink balances its ledgers, some single mothers may receive an unexpected and nasty surprise: a letter saying we have incurred a Centrelink debt.
Centrelink debts are usually the result of an oversight, rather than social security recipients trying to game the system. Single mothers may have started a new job, or had their hours increased and forgotten to update their new income. Katrina was one of those people.
Katrina, a Melbourne single mother, took on an extra job to help with the cost of living. It was only a few thousand dollars, but in addition to her normal part-time salary, it was enough to push her over the Family Tax Benefit (FTB) threshold. At tax time, she was told that she would have to repay a large amount of the FTB she had received that year. Her debt, they said, was $10,000.
Centrelink debts occur when a person is paid more money than they were entitled to. Overpayments can happen for many reasons, such as:
- Centrelink mistakes in calculating a payment rate or the eligibility.
- The person doesn’t correctly record a change of circumstances e.g. starting work or changing jobs, starting a relationship or moving house.
- A sudden large back payment of child support.
What happens next?
Single mothers issued with a Centrelink debt often find the situation overwhelming. If you’ve received a notice that there is a message in your MyGov account, and that notice turns out to be a debt letter, there are 3 key things you can do.
- Ask for an explanation: If you disagree with, or don’t understand the decision, you can contact Centrelink and ask them to explain the reason for the debt. They may be able to sort out your concerns without needing a formal review. Asking for an explanation is free and they will give you an answer within 14 days. You can also request a pause on debt repayments while you wait for an explanation of a debt decision.
- Formal review: You can ask for a formal review of a decision straight away if you understand the decision and do not agree with it, or after the explanation. When you apply for a formal review, an Authorised Review Officer (ARO) will review the decision. They will speak with you, check the facts and the policy, change the decision if it is wrong and let you know what they decide. You can also request a pause on debt repayments during a formal review of a debt decision.
- Challenge: If you don’t agree with the formal review decision, you can challenge it in the Administrative Appeals Tribunal (AAT). There are guidelines on how to do this and the most important one to know is that if you are going to, you need to do it within13 weeks of the formal review.
Use this link for the details of the process: Services Australia reviews
How to pay a debt
If the debt is legitimate and you do have to repay it, you are entitled to pay it off in regular installments, and the amount paid each time must be reasonable in relation to your circumstances. This means you can negotiate a payment plan that involves no interest payments and and that you can afford. This page is an important guide to make payment simple if that is what you need to do. Services Australia repayment
Other help
Social Security Debt Help is a website designed by Social Security Rights Victoria to help you understand what your options are and where you can get help.
Using the Self Help Tool, simply enter into the website some information about your situation, and in response you will be given a kit. This kit will provide you a summary of the options available to you to address your Centrelink debt, and help you identify questions to ask a lawyer, financial counsellor or someone else supporting you through the process.
The website can help you understand the options you have, and find further support if you need it.
