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7.16.5 Recovery not cost effective

7.16.5.1The general principle in relation to debt recovery is that recovery action should be cost effective. When deciding whether recovery is cost effective, the following factors should be considered:

  • the amount of the debt
  • the age of the debt
  • when last recovery action occurred
  • the course of action needed to pursue recovery and the likely outcome
  • administrative costs already incurred and future administrative costs
  • the debtor's financial circumstances and capacity to repay.

7.16.5.2In certain circumstances, a debt may be partially recovered and the balance of the debt written off when the sources for recovery have been exhausted.

7.16.5.3Debts should not be written off where recovery action is in place, regardless of the amount of the debt or the cost effectiveness of recovery action, e.g. a debtor is making repayments or limitations have been imposed on a current pension.

7.16.5.4Write-off action should not be considered where successful recovery of a debt would be effected under the provisions of section 205A VEA, i.e. by issuing a payment notice.