12.6.2 Deferral of a debt

Deferral of a debt

In order to defer the recovery of all or part of a debt on behalf of the Commonwealth, the Commission or a delegate of the Commission must make a determination in writing under section 206(1)(b) of the VEA. The debt continues to be legally recoverable but recovery action will not occur for the period of deferment.

Deferral is justified in a number of situations, including where:

• the client cannot or will not repay at present but entitlement to a DVA payment is imminent and recovery by limitations might be possible;
• the client is willing to make repayments but has no capacity to do so at present (for example, they have hire purchase commitments);
• the client is in prison or hospital;
• a recent death in the client’s family is preventing repayment;
• the client has been declared bankrupt and the debt is as a result of fraud;
• the client has appealed against the overpayment calculation or investigations or inquiries by the minister’s office or the Ombudsman are under way;
• the client has incurred more than one overpayment; or
• as a result of prosecution, the client is ordered to pay fines and costs. If fines are not paid the client could be imprisoned, which could be avoided if the debt is deferred.