What powers does Centrelink have to recover a debt?
Centrelink has a wide range of powers to recover social security debts, including the power to:
- make deductions from a person’s Centrelink payments
- garnishee money from wages and bank accounts
- commence legal proceedings
Is there a limitation period in which Centrelink must take action for a debt?
The Social Security Act 1991 (Cth) [s 1232] provides that no form of recovery action can be commenced by Centrelink after six years from the day on which the debt arose or, where the debt arose due to a contravention of the Act, six years from the date the false statement, misrepresentation or non-compliance was discovered by Centrelink. The six year period starts again from the date the debtor makes a part payment or acknowledges the debt, or from the date Centrelink takes any action in relation to the debt.
What happens if I become bankrupt?
If a person with a Centrelink debt becomes bankrupt, Centrelink cannot use its garnishee power or commence a court action for debt. The position in respect of deductions from social security payments is less clear. Advisors and people owing money should seek advice if this situation arises. Bankruptcy does not extinguish debts which arose through fraud. A recoverable debt can be waived or written off.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.