Bankruptcy and Centrelink Debts
What happens to my Centrelink debts if I go bankrupt?
As a general rule we have always told our potential clients not to count on having your Centrelink debt written off when you declare bankruptcy, however it seems more and more this is not the case.
In most cases it has been our experience that Centrelink will not pursue you for your Centrelink debts*(which is also outlined on the Centrelink website – see link below) for the three years you are bankrupt which is good news for those struggling week to week and need to file for bankruptcy to get some financial relief. What seems to be happening more and more lately is that they (Centrelink) may now just simply write the debt off at the end of the three years also. We had a client just the other day send us a Centrelink letter (See below) stating that not only that they wont pursue the debt for the 3 years of bankruptcy but also that they wont chase you for the debt after you have been discharged. In other words you wont ever have to pay back your Centrelink debt if you file for bankruptcy.
If you read the letter below they do however reserve the right to continue to charge you interest, which is a bit puzzling because you wont need to pay that either if they are writing the debt off anyway.
Two words of warning here before you get too excited.
- At this stage, it appears to be a bit arbitrary what debts are written off and what debts you have to keep, its impossible to get a clear statement on how that is decided. Lets just say fingures crossed your Centrelink debt will be written off.
- Bankruptcy is a serious decision, its complicated and full of twists and turns so get some professional advice before proceeding.
If you would like a no obligation free consultation feel free to call us here at Bankruptcy Experts on 1300 795 575
*For more information from Centrelink and Bankruptcy go to the Human Services Website: https://www.humanservices.gov.au/individuals/enablers/owing-money/30701
**For More information about bankruptcy go to Bankruptcy Experts Website: https://www.bankruptcyexperts.com.au