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Debt pushing my nephew to within an inch of suicide

Debt amount: 
$10000
Date debt issued: 
Thursday, 1 June 2017
Period debt occurred: 
January 2010 to June 2012
Has your case been referred to a collection agency?: 
No
Payment Type: 
Youth Allowance
Appealing Debt?: 
No
Tell us about your debt and how has this affected you? e.g. anxiety levels, financial and accommodation stress: 

These debt recovery schemes have put my extended family into a place of ruin.

The summary is my nephew who is in his 20s was on and off youth allowance between 2010 and 2012. First he finished some studies, moved into a job, the company closed and he was made redundant, went back onto welfare and finally found another job. This was across the 2010 to 2012 years. Centrelink claim that he was overpaid close to $10,000 in this period.

This is where it gets messy, my nephew has had some pretty big struggles in his life. This includes depression and other things.
However, overall, he's done pretty well. In fact, in this period where he required welfare he was employed more than he was not or was finishing studies.
Ever since 2012, he's been employed and paid taxes. He's been a pretty happy guy in his period of time. Just another guy growing up enjoying life.
Whenever he was employed his welfare was always cut off as he informed them. He never really wanted to be on it but his mother encouraged him to do so as she was struggling to make ends meet. He didn't have much of a choice.

But this debt has led him to within an inch of suicide. First, he cannot get payslips from this period as the company is gone. Second, the bank wants over a hundred dollars just to retrieve the statements from archive for one of the financial years as online only go back 5 years apparently. The past few weeks in particular have been the worst in my families lives. There is no happiness here just stress. Lots of stress.

But this is the worst part: 2 days ago my sister found rope hidden inside of his wardrobe with a loop on the end. It was pretty obvious what was going on it doesn't take a genius. Either he has been attempting to hurt himself or was preparing to try it. She confronted him and he has not spoken to anyone since. Not a word.
My sister said she was in a state of rage so understandably the confrontation wouldn't have been a pleasant one.
He's not left the house in over a week and he hasn't been to his work either. We are not sure if he is going to still have his job. Luckily his boss is quite nice, so we're hoping he is, we're just told they'll have a chat when he returns.
We've got one of my partners friends who is a councillor involved to try and help him but he won't talk to her.
We're terrified about his present state of mind. He won't tell us where he is at. We're both sitting on edge hoping we come out of this in one piece. It is impossible to sleep thinking about this. Centrelink also know about this but have done NOTHING.

My sister has had to come to me in complete despair to ask me to pay (or start paying) the debt for them. I am going to do this as there is no other way and it might be the cure he needs.
The debt seems impossible and expensive to disprove and the effect it is having is catastrophic especially when my nephew has become dysfunctional as a result of this debt.
A timely fix is the best one. The chances of motivating him to resolve this with centrelink himself are zero. He can't even bring himself to talk to us about it.
My sister blames herself for the debt as she is the one who originally encouraged him to apply for youth allowance.
It is a terrible position to be in as a parent.

How do you feel about the way the Government has handled this process?: 

This is a complete disaster for my family.
Whoever is responsible for running these policies going back to 2010 should face the music.