The partnership between FCVic and Social Security Rights Victoria (SSRV), the Integrated Services Project (ISP), aims to improve client outcomes through financial counsellors and social security lawyers working together more effectively.
This month we would like to share a case study looking at an issue financial counsellors will likely have a keen interest in: bankruptcy and Centrelink debts!
Case Study: Gregory*
Gregory is an older gentleman who has been receiving Centrelink for a long time. He was working at the same time and would diligently report his income each fortnight. Unfortunately, because of complexities in his work situation and unfamiliarity with technology, Gregory wasn’t reporting the right amounts. Centrelink eventually caught this and raised a debt of more than $20k.
Gregory appealed this debt, but it was found to be valid and wasn’t able to be waived. In making this decision the Tribunal noted that Gregory had acted honestly and to the best of his ability in reporting the income, but the debt was still valid.
Not being able to pay this and other debts Gregory entered bankruptcy.
Upon being discharged from bankruptcy, Centrelink sent Gregory a letter stating they intended to continue recovering the debt. Centrelink had decided that the debt was incurred by fraud and therefore survived bankruptcy and should not be written off under section 1236 of the Social Security Act 1991 (Cth).
Gregory appealed to an Authorised Review Officer, who affirmed the decision that the debt was recoverable as it was incurred by fraud.
SSRV assisted Gregory to appeal this recovery to the Administrative Appeals Tribunal, arguing that Gregory had not at any time acted dishonestly, let alone fraudulently, and that the Tribunal’s own previous findings in the previous matter clearly demonstrate this.
The Tribunal agreed that the debt had not been incurred by fraud and therefore was irrecoverable at law post discharge from bankruptcy. Gregory no longer has to repay this money.
This matter demonstrates that Centrelink original decision makers and Authorised Review Officers may not consider complex matters like fraud, bankruptcy, and the interaction of the two, with the same level of detail as higher levels of review, such as the Administrative Appeals Tribunal.
In Gregory’s case, Centrelink lacked sufficient evidence that the debt was incurred by fraud. There was even a previous Tribunal decision which found Gregory had acted honestly and reported to the best of his ability. Despite this, Centrelink made a decision that Gregory had incurred the debt by fraud and continued to recover the debt after discharge from bankruptcy.
Unfortunately, this decision meant Gregory had to pursue further appeals to ensure the debt was not recovered after discharge from bankruptcy. If Gregory hadn’t appealed that decision by Centrelink and pursued the correct decision, he would be continuing to pay back the debt today.
Additionally, this matter is an example of Centrelink having less than adequate regard for a previous decision of the Tribunal. It is difficult to reconcile a finding of fraud in the context of the Tribunal’s remarks as to Gregory’s honesty and good faith.
Your clients are entitled to the protection of bankruptcy, to be shielded from recovery of Centrelink debts which are not incurred by fraud.
You and your clients don’t have to accept Centrelink alleging fraud, these decisions can be appealed through the social security appeal process. We’re always happy to talk through these kinds of issues with you via our Worker Help Line, so please do call if you need.
Keep in touch
We’re looking froward to seeing those registered at the Centrelink Assets and Compensation CPD session. Remember to check out the CPD calendar for more SSRV run sessions.
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General Enquiries : 03 9481 0299
Worker Help Line: 03 9481 0655