Alice Springs woman warned she could lose her wages and her house by debt collectors

This article is more than 11 months old

This article is more than 11 months old

An Alice Springs woman says she was pursued by an external debt collector who warned they could seize her wages or stop her travelling overseas over a $3,700 Centrelink overpayment that a tribunal later found was entirely caused by the agency’s mistakes.

But Emma Delahunty, a single mother of a one-year-old, will be forced to pay back the money due to what she called a “loophole” in the rules for people receiving paid parental leave.

The administrative appeals tribunal last month ruled Centrelink was entirely at fault but that the debt would still stand because repaying it would not cause her “severe” financial suffering. The same hardship hurdle does not apply to welfare debts, which can be waived or reduced if Centrelink is to blame, Delahunty said.

Centrelink could launch more than a million new robodebts in next three years Read more

“I have very little spare cash,” she told Guardian Australia. “It’s only rained twice here in Alice Springs. Once was yesterday, but the last time it rained, in May, my toilet blocked up, and it took me two months to be able to afford to pay a plumber to come and fix it.”

Delahunty applied for paid parental leave in April last year after her son’s birth in February of that year. She returned to her job as public servant in July.

She told the tribunal that a Centrelink officer incorrectly recorded the date that she planned to return to work, meaning she went on to receive payments that she shouldn’t have.

Delahunty raised the issue with Centrelink, which did not rectify the problem. The tribunal agreed that she had acted in good faith and could not have done anything to avoid the overpayment.

In February, she was officially contacted about the debt for the first time by a private debt collector, which demanded she enter a payment plan.

“It’s so stressful, and so draining,” she said. “At the point I started to receive the debt notification, [my son] was 13 months old. It becomes a full-time job having to deal with these agencies.

“Then the phone calls started… They’re fairly aggressive. Three times a day. They are fairly hardline. You know, they can garnishee your wages. ‘Your passport can get seized’ [they said]. Essentially, ‘You can default on your mortgage and lose your house if you don’t enter a payment plan.’”

'A horrible weight on my shoulders': the fury fuelling the robodebt class action Read more

After the tribunal ruled Delahunty would still have to repay the money, she wrote to the social services minister, Anne Ruston, asking her to waive the debt.

She told Ruston: “I believe that on a matter of principle, I should not have to force my son to go without, as I rearrange my already stretched budget to accomodate [a] $3,740 debt that was incurred solely through Centrelink’s mistakes.

“For a commonwealth department, a $3,740 debt is small fry. For a single parent working hard to support my son, paying my mortgage and bills, and paying childcare fees, an unplanned for debt of $3,740 that should never have eventuated is a big deal.”

Delahunty argued it was unfair that different rules applied to people receiving paid parental leave payments, compared to those who got welfare payments.

She also pointed out that she had not claimed the full amount of paid parental leave that she was entitled to.

Despite leaving her with debts due to its own mistakes, Centrelink did not retrospectively backdate her claim to account for this, which would have reduced her debt by about $1,200. “I would consider this to be a reasonable solution to errors that I had no way of preventing,” she said.

Robodebt collector's parent company harassed consumers, ACCC says Read more

The department of human services spokesman, Hank Jongen, said: “We apologise for the difficulties Ms Delahunty has experienced.

“Where a social welfare debt arises, the department is legally obliged to recover the debt except in very limited circumstances. We have a dedicated team who can work with people to establish flexible repayment options that take into account their individual circumstances.”

Ruston was approached for comment.