The Department of Human Services has for the second time wiped the debt at the centre of a legal challenge to the controversial robodebt scheme, the federal court has heard.

But the challenge will go to trial in December after lawyers for the commonwealth told the court they were happy for the case to go ahead.

Brought by Victoria Legal Aid on behalf of Deanna Amato, 33, the case is an attempt to test the legality of the robodebt scheme, which has faced sustained criticism and is the subject of two Senate inquiries.

Amato had her $1,700 tax return garnisheed over the alleged $2,754 robodebt, but the court heard on Friday that the Department of Human Services had recalculated the debt to an “amount below two dollars”.

The commonwealth subsequently repaid the money to Amato but is refusing to pay interest.

“I’m happy that I don’t have a big debt looming over me anymore but, on the other hand, I’m stunned that it was recalculated so easily after I took legal action,” Amato said after Friday’s hearing.

“Centrelink will make you jump through hoops to prove your innocence, but it turns out they were capable of finding out if my reporting was correct and that I didn’t owe them anything like what the robodebt claimed I owed.

“It makes me question the system even more.”

Legal Aid brought the case on behalf of Amato after the department wiped the $4,000 debt owed by a Melbourne nurse, Madeleine Masterton, before arguing the case should no longer proceed.

The non-existence of a debt allows the department to argue there is no “utility” in the case, as it did in the Masterton challenge. But the commonwealth said it would not pursue this argument for a second time.

The commonwealth’s lawyer, Nicholas Owens SC, told the court on Friday that the commonwealth supported the case going ahead. He said there was an existing dispute about Amato’s demand that the commonwealth pay her interest on the money it had returned to her, which it was opposed to.

Amato’s lawyer, Peter Hanks QC, said it would have been “unfair to allow the commonwealth to … pick off the Amato proceeding on the same grounds” as the Masterton case.

He also refused to withdraw an allegation that the commonwealth had acted in “bad faith” by wiping Masterton’s debt in the first case.

The case will go to trial in early December before Justice Jennifer Davies.

A leaked draft cabinet submission prepared by the Department of Human Services for the government services minister, Stuart Robert, revealed last month that the department was recalculating the debt in Amato.

“The debt in Amato is under further review and may also be recalculated,” said the documents leaked to Guardian Australia.

After the first debt was waived, Hanks, who also acted for Masterton, said the department had a “forensic advantage” because it could wipe the debt and then say it had no case to answer.

The department said it had recalculated the debt after receiving new information from Masterton in the process of preparing for the case.

Legal Aid says the case hinges on the legality of the process itself, not the merits of the debt calculation.