Debt offset 277-04110000

Consider all appropriate administrative options to make sure the debt and case details (including role reversal) are correct.

Possible corrective actions include but are not limited to:

• income correction
• changes to care arrangements
• accepting, reviewing and reconciling estimates
• non-agency payments
• change of assessment
• agreements, and
• opting out and/or discharging arrears

When it is identified that a debt offset is possible, contact both customers to discuss this option. See Contact with Child Support customers

The following issues must be discussed with both customers:

• Family Tax Benefit (FTB) implications
• Other collection action
• No objection rights to decision

Family Tax Benefit (FTB)

Customers in receipt of FTB must be advised any child support debts which have been offset will be treated as normal payments. This means the customer’s FTB will be calculated as if they have received the payment in cash. It is important to advise customers in receipt of FTB that they need to discuss the implications of debt offsetting on their Centrelink payment - offer to warm transfer the customer to the Centrelink families line at the completion of the call.

Note: Child Support does not share information about repaying overpayments with Centrelink.

Other collection action

The approach towards collection remains the same for debt offsets, to achieve repayment of the debt in the shortest possible time. Debt offsets will reduce the overdue amount payable.

Advise customers that in addition to the debt offset arrangements, overdue amounts must be paid as soon as possible. This means:

• debt repayment must be negotiated in line with the debt hierarchy and capacity formula. See Debt repayment
• deductions can be made from Centrelink pensions, benefits or Parental Leave Payments (PLP)
• deductions can be made by an employer from the customers pay, and
• tax refunds can be intercepted

Review existing debt offset arrangements and overdue amounts and process any lump sum (one-off) debt offsets before making a decision to take additional collection action.

Use the Collection and debt macro to negotiate payment in full, or instalments:

• an ongoing debt offset that repays the debt within three payments will satisfy an acceptable arrangement
• ongoing instalment arrangements must be based on the customers capacity to pay

See the Resources page for examples.

Note: special recovery conditions must be added when processing an ongoing or overpayment debt offset. For more information, see Table 2 > Step 3.

No objection rights to a decision to offset debts

Advise customers they do not have objection rights to a decision made to offset debts. Customers must be advised they may apply to a court under the Administrative Decision (Judicial Review) 1977 Act for a review of the decision if they are unhappy with the outcome.

Consider the circumstances of the case and both customers when deciding to offset debts to make sure both customers:

• have been made aware of the information that will be considered when making a decision, and
• have had the opportunity to provide information

All customer discussions, including all details of amounts offset and decisions to offset future liabilities, must be documented in the notepad on the Debt Offset window.

Debt offsetting is an effective way for customers to manage their debt, and in most instances where a debt offset is an option, it will be applied. However, there may be limited circumstances where a decision is made for a debt offset not to be applied. E.g., where an outstanding administrative process could restore the original roles. If considering to make a decision for a debt not to be offset, seek SSO advice.

Will a debt offset be applied?

• Yes, go to Step 2
• No, go to Step 5

Record a new debt offset. See Debt offset Cuba Process Help. A Debt Offset Indicator will be placed on the Customer window.

• For overpayments and ongoing debt offsets, go to Step 3
• For one off/lump sum debt offsets, go to Step 4

When an overpayment occurs, it will be automatically offset at 100% of the ongoing liability, until the overpayment is reduced to nil.

For a one off/lump sum debt offset for an overpayment, a debt offset may need to be manually processed.

After processing an ongoing or overpayment debt offset, record a special recovery condition for both customers. This prevents automated collection action, e.g., TRIPs, Centrelink deductions and will ensure a manual review to determine appropriate collection action is taken.

In the Recovery Conditions window record a special recovery condition, using Client Agreement from the conditions drop down list. When considering a finalisation date pick a reasonable timeframe, taking into consideration how long it is expected to take for the debt offset to be fully absorbed. If unsure on when to key the end date, seek SSO advice.

Clearly document the reason for the special recovery condition within the notepad of the Recovery Conditions window. For further information, see Documenting Child Support information.

Repeat these steps on the other party to the case. For more information, see Applying a special recovery condition in Pluto and Cuba.

Note: when FINAL DEBT OFFSET CREDIT intray is generated, review the special recovery conditions to determine if it is still appropriate.

Once the debt offset is processed, letters must be sent to both customers to confirm the debt has been offset and explain any ongoing offsets.

Cuba does not automatically generate debt offset letters and manual letters and unique letters must be sent through the Letters Detail window in Cuba.

If the debt offset consists of the full amount of the ongoing monthly liability:

• UQ80.0 Debt offset - full amount of liability - payer letter
• UQ80.01 Debt offset - full amount of liability - payee letter

If the debt offset consists of a combination of a one-off lump sum and full amount of the monthly ongoing liability:

• UQ80.02 Debt offset - One off lump sum and full amount of liability - payer letter
• UQ80.03 Debt offset - One off lump sum and full amount of liability - payee letter

If the debt offset consists of a one-off lump sum because both cases have ended, or it is an overpayment offset:

• UQ80.12 Debt offset - One off lump sum overpayment

For help creating unique letters see Letters Cuba Process Help.

Customer agreement to debt offset

A customer can request a debt offset be changed or stopped, however it is Child Support's decision to do so or not.

If the decision is made not to proceed with a debt offset:

• the decision and reasons for the decision must be fully documented, and
• the DEBTOFFS intray must be manually deleted

Send the following unique letters to the customer advising them of the decision:

• UQ80.10 Debt offset - decision not to offset - payer letter
• UQ80.11 Debt offset - decision not to offset - payee letter

For help creating unique letters see Letters Cuba Process Help.

A debt offset may need to be manually ended:

• once the balance of arrears owed has been cleared. This may occur when the final offset credit has been absorbed or when the debt is cleared by other collection arrangements
• if the roles reverse again, or the case ends

When a debt offset is ended, special recovery conditions for both parents must be reviewed to determine whether they are still required or need to be end dated.

Consider whether there are any other circumstances where the special recovery conditions should still apply, e.g., customer has lodged Hardship application prior to lodgement of tax return.

For further information on ending a debt offset, See Debt offset Cuba Process Help.