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7.17 Deferral

7.17.1Deferral of a debt is used when, for an identifiable period of time, the debtor is unable or unwilling to make repayments and deferral is considered appropriate. The delegate must be satisfied that recovery is not currently possible, but that successful recovery of whole or part of the debt may be possible within a reasonable period of time. The debt continues to be legally recoverable, but recovery action will not occur for the period of deferment. The authority to defer the recovery of the whole or part of a debt on behalf of the Commonwealth must be determined under paragraph 206(1) (b) VEA.

7.17.2Deferral is justified where the debtor:

  • cannot, or will not, repay at present but entitlement to a DVA payment is imminent and recovery by limitations may be possible
  • is willing to make repayments but has no capacity to do so at present (e.g. has hire purchase commitments)
  • is in prison or hospital
  • has had a recent death in the family preventing repayment
  • has been declared bankrupt and the debt is due to fraud
  • has appealed against the overpayment calculation, or there are investigations or inquiries by the Minister's office or the Ombudsman
  • has more than one overpayment
  • as a result of prosecution, is ordered to pay fines and costs. If fines are not paid, the debtor could be imprisoned, which can be avoided if the debt is deferred.