Debt offset (CS) 277-04110000
This document outlines information about how child support debts are offset.
On this page:
Debt offset decision and finalisation
Review and customer contact
Table 1
Step |
Action |
1 |
Ensure debt is correct + Read more ... Consider all appropriate administrative options to ensure the debt is correct. Possible corrective actions include but are not limited to: |
2 |
Contact customers + Read more ... When it is identified that a debt offset is possible, both customers should be contacted to discuss this option. See Contact with Child Support customers The following issues must be discussed with both customers:
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 at the completion of the call. Note: Child Support does not share information about repaying overpayments with Centrelink. Other collection action Advise customers that in addition to the debt offset arrangements, other collection action may be taken. Tax refunds can be intercepted unless Child Support is contacted to discuss hardship. Where capacity to pay is identified, collection action such as employer withholding and Centrelink deductions may also be considered. Note: special recovery conditions must be added when processing an ongoing or overpayment debt offset. For more information, see Table 2 > Step 3. Review existing debt offset arrangements and overdue amounts before making a decision to take additional collection action as it may not be appropriate to do so for the customer with the smaller debt. The approach towards collection remains the same for debt offsets, to achieve repayment of the debt in the shortest possible time, whilst still taking the circumstances of the payee into consideration. The new payee’s capacity to repay the arrears should be considered in line with the capacity formula. If the amount that is being offset exceeds or meets the acceptable range for repayment this would be considered an acceptable arrangement. However, it does not prevent exploring with the customer whether they have additional capacity to make payments to pay the debt sooner. If based on the normal debt repayment capacity calculations, the amount being offset is below the acceptable range, an additional arrangement should be negotiated in line with the Debt Repayment hierarchy. If the debt offset does not meet the acceptable range for repayment and the payee advises they are not able to pay anything further towards the debt, Financial Hardship may need to be considered. For examples of how to consider whether the debt offset is meeting the acceptable range, see Table 2 on the Resources Tab. 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. |
Debt offset decision and finalisation
Table 2
Step |
Action |
1 |
Debt offset decision + Read more ... Circumstances of the case and both customers will be considered when deciding to offset debts ensuring both customers:
All customer discussions, including all details of amounts offset and decisions to offset future liabilities, must be fully 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 some circumstances where a decision is made for a debt offset not to be applied, for example, Financial Hardship. If you are considering making a decision for a debt not to be offset, seek SSO advice. Will a debt offset be applied?
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2 |
Process debt offset + Read more ... Record a new debt offset. See Debt Offset Cuba Process Help. A Debt Offset Indicator will be placed on the Customer window.
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. |
3 |
Record a special recovery condition + Read more ... After processing an ongoing or overpayment debt offset, a special recovery condition must be recorded for both customers to prevent automated collection action, for example TRIPs, Centrelink deductions. This 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 you are 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, special recovery conditions should be reviewed to determine whether still appropriate. |
4 |
Finalisation + Read more ... 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:
If the debt offset consists of a combination of a one-off lump sum and full amount of the monthly ongoing liability:
If the debt offset consists of a one-off lump sum because both cases have ended, or it is an overpayment offset: 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. Whether or not the customers agreed to the offset, the letter to each customer must include the following advice. ‘If you do not agree with the decision in this letter, you may apply to a court for a review of the decisions under the Administrative Decisions (Judicial Review) Act 1977.’ |
5 |
Decision that debt offset not to be applied + Read more ... If the decision is made not to proceed with a debt offset:
Send the following unique letters to the customer advising them of the decision:
For help creating unique letters see Letters Cuba Process Help. |
6 |
Ending a Debt Offset + Read more ... Once the balance of arrears owed has been cleared, the debt offset may need to be manually ended. This may occur when the final offset credit has been absorbed or when the debt is cleared by other collection arrangements. The debt offset may also need to be manually ended 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, for example 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. |