What Happens If You Owe Centrelink Money

So you’ve been overpaid by Centrelink and now you want to know what happens if you owe them money. It can be really bad news I’m afraid if you do nothing.

Many Australians are waking up in what’s called Robodebt. Sometimes themselves have made a mistake or sometimes it’s the Government themselves who have overpaid.

In this guide we’ll help you organize your affairs if you owe them and the debt needs to be repaid.

Owing Centrelink money

You’re probably curious about what the end result or repercussions are if you’re in this situation of owing the Australian government money.

Let’s answer that straight up:

If you owe Centrelink money, then they will make you pay it back! It’s a real debt with monthly interest where you’ll have to find a means in which to repay it. They won’t magically forget that you owe Centrelink money and they might take a portion out of your weekly payments.

What Happens If You Owe Centrelink Money in Australia

It’s a scary thought especially if you have rent and bills to pay. You might have to get a part-time job to get you by in the interim. It’s also a bit embarrassing too.

This is what people have had to do. Even if Centrelink makes the mistake, you’re liable! It’s frustrating but that’s why we recommend that you save a portion of your weekly payments for a rainy day like this.

Dealing with Centrelink debt collectors

If you fail to make your repayments with Centrelink debt, then the money you owe them might be passed on to a 3rd party. This is typically their in-house debt collectors who call up people each and every day demanding payments. They can be aggressive, rude and some people have reported harassment, but we’re not so sure.

Will I go to jail for Centrelink debt?

Probably not. Centrelink rarely sends people to jail. Those who do go to jail for Centrelink debt are those who committed serious fraud knowing that what they were doing was illegal. If you merely made a simple mistake or can prove that Centrelink made the mistake via Robo-debt, then it’s highly unlikely anything will happen, especially if you commit to a payment plan.

Centrelink debt letter

Did you get a letter just recently in the mailbox that says “Warning! You have been overpaid and now need to pay us back with additional penalties, fees and interest. Please contact us immediately!”? These letters are being sent out all across Australia right now and they’re often genuine.

Will I be prosecuted?

If you ignore the demanding letters and phone calls, then yes, it’s likely that you will be prosecuted. They can take you to Court with all of their documentation with the Judge often siding with Centrelink. After all, it is a debt which needs to be repaid. They are always open to payment plans where you can still meet your basic living expenses.

Can I travel overseas?

Centrelink now has the support of the Australian government to block people who owe Centrelink money from travelling overseas. Basically, you’ll arrive at the airport and will be denied boarding because you owe money to Centrelink, and this block can last for years meaning you can’t travel overseas until they’re satisfied.

They do this because they believe, if you can afford a holiday, then you can afford to pay them back. It’s really that simple. It makes sense, right? Why should you get a free holiday from the Australian taxpayer?

Centrelink report on my credit history

Often Centrelink debt or owing them money won’t really appear on your credit history, but sometimes it can. This can reduce the likelihood of you getting approved for a car loan to get to and from your new job. For this reason, you need to avoid recovery action in the first instance.

Next steps

Owing Centrelink money is never a good feeling. You never know when they’re going to cut off your payments nowadays.

What you need to do is be proactive. Organize a payment plan with them. Set aside some dollars each week. Start making the payments, even if they are small, so they will go quiet on you and chase the next person.

Sometimes they might agree to a Work For The Dole scheme. This means your debt is repaid over time through community work projects.

Always remember that there is light at the end of the tunnel.

If you need to speak with a professional, please contact the National Debt Helpline on 1300 007 007 or Lifeline on 13 11 14 today. Both can help you if you’re in serious financial challenges.