What is a write off of a debt?
A write off is where Centrelink agrees to suspend, either for an indefinite or a specified period, all action to recover the debt.
Under what circumstances will Centrelink write off a debt?
Debts can only be written off where:
- the debt cannot be recovered at law e.g. a debtor has died leaving no estate or insufficient funds in the estate to pay their debt
- the person has no capacity to repay the debt - a person will be taken to have the capacity to repay the debt unless they can demonstrate severe financial hardship if deductions are made from Centrelink payments
- the person cannot be found
- it is not cost effective for Centrelink to take action to recover the debt
[See Social Security Act 1991 (Cth) s 1236(1A)]
Does a write off completely cancel the debt?
Contrary to its name a write off does not completely extinguish a debt. The debt remains enforceable but a decision has been made not to pursue it, either indefinitely or for a specified period. In either case the decision can be reversed and debt recovery proceedings can recommence at any time in response to a change in the debtor's circumstances.
However once a debt is written off compulsory recovery cannot be recommenced after the expiration of the limitation period (usually six years).
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.