Editors --- "Overpayment: bankruptcy" [2005] SocSecRpr 11; (2005) 7 Social Security Reporter, Article 11

• DFaCS and GRINDLAY
• Background
• Discussion
• Formal decision

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Overpayment: bankruptcy

DFaCS and GRINDLAY

(2005/91)

Decided: 31st January 2005 by G. Freidman

Background

Severe financial problems had caused Grindlay to seek bankruptcy, and she was declared bankrupt on 25 March2002.

In June 2004 Centrelink raised and sought to recover from Grindlay a debt of $12,895.21 for the period 29 June2001 to 12 February 2004 because the rate of parenting payment (partnered)(PPP) she was paid in this period did not take into account the correct amount of her partner’s earnings.

Review by an ARO was unsuccessful and she appealed to the SSAT. The debt was recalculated as follows: $597.53 for the period 29 June2001 to 25 March 2002 (date of bankruptcy), and $12,297.67 from 26 March 2002(day after bankruptcy) until 12 February 2004. The SSAT set aside the decision to raise the entire debt based on her bankruptcy. DFaCS appealed to the AAT.

Discussion

The AAT considered s.5 of the Bankruptcy Act 1966 which defines the ‘date of bankruptcy’ and s.82 of the same Act that provides a definition of ‘provable debts’ that will be covered by the bankruptcy:

82(1)...all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.

The AAT held that only the debt accrued prior to the date of the bankruptcy ($597.53) was provable and therefore not recoverable, and accordingly reduced the amount of debt to be recovered to$12,297.67. It noted that it was possible for a further or second bankruptcy to occur whilst a bankrupt was undischarged but this had not happened.

Formal decision

The AAT set aside the decision under review and substituted a decision that Grindlay owed a debt to the Commonwealth in the amount of $12,297.67 for the period 26 March 2002 to 12February 2004 and that the debt be recovered.

[G.B.]