Recovery from mutually liable co-debtors 107-05090030

A jointly and severally liable co-debtor can be a person who knowingly engaged in an action where another person obtained money. This action must contravene a provision of the Social Security Act 1991 or Family Assistance (Administration) Act 1999, and:

• convictions for the offence/s committed are successful for both people, and
• the people are jointly and severally liable to repay all or part of the debt as directed by the judge

In addition to those that are the result of a court judgement, co-debtor liability can occur:

• for a debt incurred during the Assurance of Support (AoS) period where there is more than one assurer
• because of non-compliance with a garnishee notice

The primary debtor is always the customer the debt has initially been raised against.

When pursuing these debts, staff can use all recovery methods. For deceased customers, recovery can occur from the estate. The individual finance circumstance of the customer should determine their rate of repayments. The other party's rate of recovery should not influence the customer's rate of repayments.

If the primary co-debtor passes away, their estate can be pursued for payment. After recovery from the estate, re-raise the outstanding balance against the co-debtor. This is when the co-debtor liability was for the full amount of the debt. If there are multiple co-debtors they must be re-linked after the debt is re-raised. Reduce the debt on the primary co-debtor record by the amount recovered. Include any amount collected from the settlement of the primary customer's estate.

Co-debtor provisions do not apply where third parties make unauthorised withdrawal of funds paid after the death of a customer. There are no legal grounds for debt recovery under social security law. An exception is when a person is convicted of collusion with the social security recipient to defraud the Commonwealth.

It is the responsibility of the administrator/executor of the deceased customer's estate to pursue a case under criminal law. This will include raising a debt against the deceased estate. See:

• Death of an income support customer or their partner
• Death of a family assistance or Paid Parental Leave scheme customer

This includes where an executor or joint account holder has withdrawn funds. See Requesting refunds and raising debts for deceased customer for more information.

When both parties are eligible, then Interest charge (IC) will apply. If either party has a payment arrangement or exclusion in place, both parties will be excluded from an Interest Charge.

Limited liability will apply when a court has determined the amount each co-debtor must re-pay.