25/01/2017 8:21 AM AEDT | Updated 25/01/2017 11:37 AM AEDT

This Man Took Out A Bank Loan To Pay Back Centrelink Debt Collectors

'I paid them so they'd leave me alone'.

A young Victorian man forced to take out a bank loan to pay back a Centrelink debt claims the welfare agency never actually told him about his debt and the first he heard was from a debt collector.

Aidan from Warrnambool, who declined to give his surname, received a letter from Centrelink in November informing him that it was reassessing his reported income between 2014 and 2015. The letter came as part of Centrelink's controversial new automated data-matching system which has been accused of errors by countless welfare clients and mistakenly levelling false debts in the many thousands of dollars.

Aidan told The Huffington Post Australia he went into a Centrelink office to ask about the letter. An employee told him not to worry, and to wait for a follow-up letter once he had confirmed his income and other employment details.

"So I waited for the second letter, and the second letter I got was from a debt collector," he said.

"I didn't hear a word about it [from Centrelink] then the week before Christmas I got a letter from a debt collector, not Centrelink, saying I owe them $2500. I spoke to them and they were demanding to pay them or they would collect my assets."

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The normal process is that a client will receive initial correspondence asking them to confirm employment or income details. If Centrelink's system finds a discrepancy between details reported to it, and details reported to other government agencies such as the tax office, a debt may be raised and the client is supposed to receive further correspondence outlining the alleged debt, including how and when it must be repaid.

Such discrepancies can be due to outright fraud or simple mistakes in reporting, but many clients have claimed that the automated data-matching program is counting some income twice, or making other clear errors that raise a debt where none should exist.

"I didn't even get a text from Centrelink," Aidan said.

"I usually get texts whenever they send me an email, but I got nothing after that first letter."

He contacted the debt collection agency, which said he needed to immediately begin paying back the debt. It came to nearly $2500. Aidan said he couldn't believe the debt was so high, as he only claimed Centrelink for a year while he also did spots of casual work as a security guard.

"I was getting $210 a fortnight, how the hell can I owe them $2500?" he said.

"I worked for about five months of that financial year, and they said I reported it wrong for the whole five months."

Aidan went back to Centrelink to query the debt collection notice, but was told he was out of options.

"It was a shock at the time. They said because it was passed to the debt collector, there was nothing they could do about it," he said.

"[The debt collectors] said to pay them now, either upfront or $150 a week minimum. I have a car loan, I've got living expenses, but they did the maths and said I would be able to pay them $150 a week."

Aidan said his small savings account would have been "wiped out" by having to pay it all in one lump sum, and after being really upset by the whole process, just wanted the debt collectors off his back. He walked into the local bank and took out a loan.

"I paid them so they'd leave me alone," Aidan said.

"We filled in the forms to dispute the debt, but we never know when we're going to hear back."

Centrelink confirmed to HuffPost Australia that any payments made for debts which turn out to be incorrect will be returned to clients, but Aidan isn't holding out much hope.

"I don't know how it works. I doubt that will happen. I'm not getting my hopes up. It'd be nice to have it back," he said.

"It's completely disappointing. It's horrible. I've seen stories of single mothers and kids saying they owe $10,000. Where do they pull that from?"