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How to Handle Centrelink Debt

centrelink debtWhether you lost a job, have a reduced income or rely on the Centrelink to help you take care of a loved one, having the funds at hand can reduce financial stress. However, when you owe money to Centrelink it can be an added burden on your already-tight budget. If you are dealing with debt to Centrelink, information is your friend. Understanding how the debt works and how you can pay it off will help you create a plan to get out of debt.

Getting into Debt with Centrelink
There are three basic ways to end up on the debtors list including advanced payments, benefit issues and misinformation/error. Odds are that your debt falls into one of these categories. How you deal with the debt is influenced largely by what type of debt you owe.

Advanced Payments: Advance Payment is money you knowingly took. Advanced payments are funds taken from money you qualify for in advance. This can be helpful if you need a little extra cash to pay for an unexpected emergency. The amount of money you qualify for depends on how much money you receive on a regular basis from the program, your income and whether or not you have taken out an advanced payment in the last year.

Benefits: The Centrelink system can be complicated based on your situation for dealing with them. Small changes in your circumstances can drastically change your entitlements. Failure to inform Centrelink can have huge financial consequences resulting in debt and possible cancellation of benefits.

Misinformation/Error: Centrelink keeps a close eye on your personal information. If you lie, omit or forget to update information on your account, you may end up owing the agency money. You will be required to pay back the difference between what you actually qualify for and what you received. Sometimes a computer or human error results in a larger-than-expected payment. Even if the error is on the end of Centrelink, you are required to repay the overpayment back to the agency.

If you have debt with Centrelink, you will be informed of the debt by letter. If you take out an advance or a loan, a specialist will walk you through your repayment options. Your letter should include an amount owed and a due date for the funds.

Dealing with Centrelink Debt
Each type of debt has a payment method to simplify the process:

Advanced Payments: When you take out an advance payment, you can set up a payment plan. Many individuals choose to have some money taken out of their regular payments from Centrelink, until they have completely repaid the debt. You can also have the money withdrawn from your personal bank account, submit a payment online or send a check. In general, these payments must be completed within a predetermined time.

Benefits: Its really as easy as contacting Centrelink and discussing the debt and the benefits that you are on. As long as there is no fraudulent activity they will work with you in coming up with a payment program that works with your financial situation. Its important to address this immediately so that you don’t get further into debt or lose your benefit payments.

Human Error: When there has been an error or misinformation, you should contact Centrelink as soon as possible to schedule a payment plan. Additionally, if you receive more money than you believe you qualify for, you should contact the agency as soon as possible.

Unable to pay debt
Things happen and sometimes repaying the debt you owe is more difficult than you anticipated (or completely unexpected in some cases). What happens if you cannot repay debt that you owe Centrelink? There are several ways to handle this situation:

Do not pay: This is the worst option. If you refuse to pay the debt you owe, Centrelink can take you to court, garnish your wages and reduce future payments from them until your pay your debt in full. If you have a loan, the agency could seize your property and sell it to get the money you owe them. If Centrelink takes you to court or default on your payments, nonpayment could damage your credit history. This could make it more difficult to take out loans in the future. Not paying your debt should be your last resort.

Try to negotiate: If you are unable to make the payment scheduled laid out, contact Centrelink as soon as possible. An employee may be able to work with you to determine a more favorable payment plan. You have a better chance of getting help if you call as soon as you know that you will not be able to make your payments. Payments may be spread out over a longer period to reduce your monthly payment.

Pay monthly: Monthly payments are often easier to afford than a lump sum payment. You can have the money removed from your payment. You may not even notice the missing money and you can rest easy knowing that your debt is getting smaller every month.

Lump sum payment: Sell property, get a better paying job or find another way to earn extra income and pay off your debt in one swoop. This may be difficult if you live on a small income, but it eliminates the stressor immediately and eliminates or significantly reduces the amount of interest you owe on any debt.

Contact Centrelink here to discuss payment options for money you may owe.

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