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Is a refund of repayments payable to a bankrupt customer 107-05070020

For Debt Staff only.

This document outlines the impact on Centrelink debts for bankrupt customers. Not all debts cease when a customer becomes bankrupt. However, some cease to be payable for the term of the bankruptcy.

Refund of repayments to bankrupt customers

Step	Action
1	When a customer enters bankruptcy + Read more ... Debt staff must examine all debts to determine if a refund of repayments applies. Check the Modify/Assess Debt (OPMA) screen for each Debt ID to determine the period of the debt. If the period of the debt occurs: before the date of bankruptcy, go to Step 3 after the date of bankruptcy, go to Step 5 both before and after the date of bankruptcy, go to Step 2
2	The period of the debt occurs both before and after the date of bankruptcy + Read more ... Send a Fast Note to the relevant Debt Raising Team. See the Resources page in Debt ownership for referral details. Request they split the debt into 2 new debts (before and after the date of bankruptcy). Once the debt has been split, for the debt covering the period: before the date of bankruptcy, go to Step 3 after the date of bankruptcy, go to Step 5
3	The debt covers the period before the date of bankruptcy + Read more ... Were any repayments made after the date of bankruptcy? Yes, go to Step 4 No, do not refund these repayments. Record details on a DOC. Procedure ends here
4	Refund the repayments made after the date of bankruptcy + Read more ... If the Service Officer decides a refund applies, they need to ensure the payment goes to the correct person. This can be the customer or the trustee. The following apply depending on the initial repayment method: Withholdings are income as they derive from the reversal of a decision to withhold payments - refund these to the customer Wage garnishees are income - refund these to the customer Third party withholdings - refund to the person who made the withholdings Financial Institution account garnishee, any funds received form part of the bankrupt estate, in most cases - refund these to the trustee, not to the customer Ongoing payment arrangements are not part of the customer's income, they are the customer's property - refund these to the trustee Reparation and judgement orders Do not resume recovery action after discharge of the customer's bankruptcy where: a reparation or judgement order is in place, and they became bankrupt after the placing of the orders If recovery has restarted after bankruptcy, refund all monies collected: during the period of the bankruptcy, and/or after discharge (excluding funds received from the bankrupt estate, which are dividends) Write off the debt. Note: if the customer has more than one debt, do not refund. Transfer payments to a debt with a period after bankruptcy. For assistance with refunds, see Transfers and refunds. Record details on a DOC. Procedure ends here.
5	The debt covers the period after the date of bankruptcy + Read more ... Do not refund repayments made on debts covering a period after the date of bankruptcy: recover the debt as normal record details on a DOC