What to do if you get a Centrelink debt letter

Thousands of Australians have been left reeling in recent days after receiving an unexpected and unwelcome debt letter from Centrelink in the mail.

Thousands of Australians on Centrelink have been left reeling in recent days after tax lodgements and other end of financial year reviews landed them on a list of people owing the Government money.

The Government believes some Centrelink recipients have been overpaid and are now being asking for part of that money back.

Last week, news.com.au revealed Centrelink was ending out bills was sending out letters trying to recoup amounts of up to $10,000 in childcare subsidies for periods extending back years.

And just days later, Services Australia told Senate estimates they had issued debt letters to 11,771 people who owed them $32.8 million cumulatively, from overpayments to do with the JobKeeper program because income had been misreported.

It comes less than a month after the Robodebt saga – which unlawfully matched tax and Centrelink data resulting in thousands of bogus debt claims against recipients – concluded with a $1.7 billion settlement for its victims.

If you got one such debt letter in the mail recently, don’t panic just yet – the Government has plans in place for you to pay everything back over time.

And if you don’t think the fee is fair, there are ways to dispute it.

Here’s what to do if you get a debt letter in the mail.

RELATED: Centrelink withdrew 102-year-old’s pension

People queue at a Sydney Centrelink in March, days before the business-saving JobKeeper program was announced. Picture: John Feder/The Australian

RELATED: Government expects jobless uni student to live off $20 a week

Do I have to pay back the debt?

Not necessarily.

If you think there’s been a mistake and you don’t owe them anything, you may be able to get out of your debt.

“We understand you may not agree that you have a debt or need to repay money,” the Centrelink website states.

They encourage you to get in touch if you want to challenge the decision.

You can do this by calling the number in the debt letter, ringing your regular point of contact or calling the Centrelink Debt Recovery Line.

Your debt will be explained to you and they will consider any new information you can give them.

If this doesn’t sway them, you can request for a formal review into the decision to appeal it.

The review doesn’t cost you anything and they aim to have finished their investigation within 49 days.

An authorised review officer who is independent from Centrelink will look into your case and change the decision if it’s wrong.

Will I go to jail if I don’t pay it?

This week, thousands of Aussies received an unexpected and unwanted letter from Centrelink in the mail. Picture: David Mariuz

There are several different forms of Centrelink Fraud under sections 134 and 135 of the Criminal Code Act 1995 (Cth).

According to Nyman Gibson Miralis Lawyers, you can’t be sent to jail for a debt of this nature unless they have reason to believe there has been deliberate wrongdoing.

If it’s a genuine mistake, you shouldn’t get into any trouble.

Centrelink can refer a debt to the Commonwealth Director of Public Prosecutions (CDPP) if they think you’ve lied or omitted information to turn a profit.

“If Centrelink suspects that you have committed an offence, they will first conduct an investigation. They may invite you to attend a formal interview or may come to your house. If they still believe you committed an offence, they will then refer the matter to the CDPP,” NGM Lawyers wrote on their website.

However, this is a very lengthy process and wouldn’t be undertaken lightly.

Although it’s unlikely your debt will become a criminal matter, there are other penalties if you’re late on your payments.

“Legally we have to recover money that’s owed to us,” Services Australia says.

It’s suspected that at least seven people took their own lives because of the thousands of dollars in debts they were wrongfully expected to pay back during the Robodebt debacle.

If you’re late on a payment or haven’t organised a payment plan with them, they’ll start charging you interest.

They can then escalate it by going to your employer or bank, to have your money docked and sent to them instead.

Services Australia can also request that the tax office withhold your tax refund, so they can take that money to pay off your debt instead.

The Government cited a “last resort” option if you still haven’t paid off your debt, which will see them involving an external debt collection company.

They use three companies to carry this out – Milton Graham, Probe Operations and ARL Collect Pty Ltd – who will send you either a letter or text or give you a ring.

On their website, they’ve also warned: “If you’re not repaying your debt at a suitable rate, we may issue a Departure Prohibition Order.

“It’ll stop you from leaving Australia.”

Until you’ve paid the debt in full or agreed to an acceptable payment arrangement, you won’t be able to go overseas.

“We don’t need a court order to stop you from leaving Australia,” the website added.

Your Centrelink debts won’t affect your credit rating with a bank.

I don’t have enough money to pay the debt, what do I do?

One woman was slugged with $10,000 in debt from overpaid childcare subsidies. Picture: John Feder/The Australian

First off, it’s worth noting that you don’t have to pay everything off straight away if you’re in a Covid-affected area.

Any new debts incurred while you’ve been in lockdown – which will apply to most NSW and Victorian residents as well as some Queensland residents – have been put on pause.

“If you’re in a Covid-19 lockdown Local Government Area and get a debt letter, you don‘t need to do anything,” the Government says online.

However, it’s important to think about how you’re going to pay off your debts once the pause is lifted.

There are two main ways to repay money you owe – either paying it all outright or setting up a payment plan.

The payment plan means you pay a regular amount, or they deduct a regular amount from your earnings.

Services Australia stressed that it’s really crucial to get in contact with them before the due date for your payment/s.

“If you aren‘t able to start repaying money before the due date, please talk to us,” the website states.

“It’s important you call us before the due date.”

Otherwise, they may start taking action against you.

At any time, you can also make extra payments towards the money you owe.

This could be a regular payment or a one-off payment.

Government responds

In a statement to news.com.au, a government spokesperson defended all the debt letters that had been recently sent out.

“Under the longstanding principles of Australia’s social security system, it is the responsibility of individuals receiving social security payments to report their earnings accurately and to tell Services Australia if their income or circumstances have changed to avoid being overpaid,” the spokesperson began.

“This process ensures our social security system is sustainable into the future because it means taxpayers only pay recipients what they‘re eligible for – no more and no less.

“The alternative would see taxpayers paying welfare benefits to ineligible recipients.

“Services Australia takes every opportunity to remind people of this obligation during the application and payment process.

“When a person is overpaid, Services Australia will always write to them to let them know how much they were overpaid, and explain why they owe money.

“Services Australia also provides advice to these welfare recipients of their repayment options.”