7.16.1.1 — A debt is normally written off where it is not possible or cost effective to recover it. Write-off action may be taken where it is considered that action to recover an overpayment should stop without affecting the Commonwealth's right to recover at a later date. Write-off action should only be taken if all appropriate recovery action has been taken and recovery is not possible. The authority to write-off a debt arising under, or as a result of the VEA must be determined under paragraph 206(1) [3] VEA.
7.16.1.2 — Before an amount can be written off, the delegated officer must be satisfied on the following points:
7.16.1.3 — The circumstances in which a delegate may exercise the discretion to write-off the whole, or part, of a debt are as follows:
7.16.1.4 — Before an amount is written off, an acknowledgment of the debt should be obtained where possible.
7.16.1.5 — Unless a case is irrecoverable at law, the debtor's circumstances should be reviewed every 12 months, or more frequently as appropriate, in case the debtor's capacity to repay improves.
7.16.1.6 — A written off debt can be re-raised at any time where a debtor's capacity to repay improves. For example, when the debtor lodges a successful claim for income support or receives a lump sum from an estate, recovery action should commence. However, any such recovery action is constrained by the 6-year statute of limitations contained in subsection 206(2) [3] VEA.
Note:For more information refer to this manual's Section 7.3 Statute of Limitations at the beginning of this chapter.
7.16.1.7 — In certain cases where the departmental delegate for particular reasons has accepted a partial repayment and written off a portion of the debt because it is not possible or cost effective to pursue full repayment, the debtor may request a Deed of Release to be signed by both parties. The Deed of Release is a release from all liability and effectively prevents both parties from taking any further action in relation to the debt. The delegation to sign a Deed of Release is at the Director level.
7.16.2.1 — Where a debtor is deceased and there is an outstanding overpayment, a formal claim must be made on the estate. If it is established that there is no estate, insufficient estate, or it has already been distributed, the debt may be written off. If reasonable attempts to locate the executor or next of kin are unsuccessful, or there is no response to the claim on the estate, write off can be considered. The debt should be reviewed after a three to six month period to ascertain whether circumstances have changed (e.g. the surviving spouse or next of kin wishes to repay the debt voluntarily). If after the review period, there is no likelihood of a family member making a voluntary repayment, the debt may be waived under the extreme or unusual circumstances waiver guidelines. Refer to this manual's Section 7.18 Waiver.
Example
A single pensioner residing in accommodation provided by a State housing authority passes away. The pensioner has no next of kin, and leaves no estate.
7.16.3.1 — Where a debtor has no capacity to repay the debt and there is no reasonable prospect of the financial situation improving, a debt can be written off. All reasonable attempts at recovery should be made before write off is considered. Where there is no capacity to repay in the short term but recovery may be possible within a reasonable period, consideration should be given to deferring recovery. Refer to this manual's Section 7.17 Deferral.
7.16.4.1 — All reasonable efforts should be made to locate debtors before write-off is considered. However, the cost effectiveness of pursuing recovery must be kept in mind where extensive inquiries may be necessary.
7.16.4.2 — Initially, departmental records or other easily accessible non-departmental records should be checked. These would include:
7.16.4.3 — The extent of inquiries to be made should be determined by taking into account the amount of the debt outstanding, the age of the debt, the period since any recovery was made, and the known circumstances of the debtor, i.e. the likely prospect of recovery being made.
7.16.5.1 — The 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:
7.16.5.2 — In certain circumstances, a debt may be partially recovered and the balance of the debt written off when the sources for recovery have been exhausted.
7.16.5.3 — Debts 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.
7.16.5.4 — Write-off action should not be considered where successful recovery of a debt would be effected under the provisions of section 205A [3] VEA, i.e. by issuing a payment notice.
7.16.6.1 — A debt may be written off as irrecoverable at law where:
In some cases the debtor may feel a moral obligation to repay the outstanding amount even though the amount is irrecoverable at law. Accordingly a 3-6 month period should be allowed to ascertain whether this is the case, and if so, recover and finalise the debt. If the debtor does not wish to repay the debt, then the debt must remain written off.
7.16.7.1 — Where a person is no longer in payment and has incurred a debt of less than $50, the Department should consider writing the debt off rather than waiving the debt, if it is likely that the person will receive pension payments in the future.
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