Debt offset (CS) 277-04110000

Child Support can offset debts between 2 customers. This usually occurs when the customers’ roles have changed (often due to a care change) and each owes a debt to the other. A debt created by a parentage overpayment order can also be offset.

Debt offsetting can be an effective way for customers to manage their debt.

A debt that has been offset is treated as if it has been paid to the customer. That is:

• instead of collecting an amount from the first customer and paying it to the second customer, then
• collecting an amount from the second customer and paying it to the first customer

This reduces each customer’s debt to the other by the offset amount.

Debt offsetting is available to customers who have had or currently have the role of payee, usually because of changes in care arrangements. For example, where a payer becomes entitled to receive child support payments because there has been a change in a level of care for a child.

When there is no longer a credit to be offset, or if the debt offset will not reduce a debt in a reasonable timeframe and capacity to pay is identified, collection action may be required for ongoing payments and/or remaining debt. This is particularly relevant for the customer with the larger debt.

Debt offset is not available for overseas maintenance liabilities or spousal maintenance liabilities.

Debt offsets can be in the form of:

• One-off (or Lump Sum) Offset – is a ‘one off’ offset of amounts. Each customer must owe child support arrears to the other to offset one amount against the other. Usually, the debts are not equal amounts – any remaining amount of the larger debt is still owed by the customer who had the larger debt
• Ongoing Offset – is offsetting all of the ongoing liability owed by one customer against a maintenance debt owed to that customer by the other. An ongoing offset is used when one customer has a maintenance debt and the other customer has an ongoing liability.

See Debt Offset Cuba Process Help.

Offsetting debt between customers may be possible when:

• both customers have a maintenance debt or an overpayment debt
• one customer has a maintenance debt and the other has an ongoing liability, or
• both customers have a maintenance debt and one has an ongoing liability

If both customers owe a maintenance debt to the other and one of the customers has an ongoing liability to the other, it may be appropriate to apply both types of offset. See Debt Offset Cuba Process Help.

Note: where a debt offset will not reduce a debt in a reasonable timeframe, other collection actions may be considered in addition to the offset. However, if the current payer is in financial hardship, further collection action may not be appropriate. For more information see Financial hardship.

The Resources page contains examples of different debt offset scenarios.

It is possible to identify opportunities for a debt offset from:

• payer becomes a payee - when the customer's role changes and there is an existing liability between the parties a DEBTOFFS intray is created to alert the case manager that debt offsetting may be possible
• general customer contact - other opportunities for debt offsetting may be found through customer contact or debt recovery processes

Discretion to implement debt offset

Agreement of both customers will be sought where debt offset is an option. However, Child Support can decide to offset debts without having agreement from the customers. For example, there may be no other collection avenues and an offset is appropriate.

There are important issues to consider when making this decision:

• the individual circumstances of the case must support a decision to offset a debt without the customers’ agreement
• if possible, staff should seek a compromise where neither customer is disadvantaged by the offset
• the child support needs of the payee must be recognised, and
• the agreement of the customers should be sought

Note: there are no objection rights to a decision to offset debts. Customers should be advised they may apply to a court under the Administrative Decision (Judicial Review) Act 1977 for a review of the decision if they are unhappy with the outcome.

Service Officer

• Identifying debt offset opportunities
• Discussing debt offsets with customers
• Processing debt offsets

Service Support Officer (SSO)

• To provide advice regarding complex issues or when Service Officers require assistance