7.3.1.20 Legally Irrecoverable Debts

Summary

This topic provides information about the circumstances in which a debt (1.1.D.60) may not be recoverable at law. A debt that is not recoverable at law may be written-off.

Legally irrecoverable debt

An FA debt is irrecoverable at law if:

  • the debt is unlikely to be recovered as a result of legal proceedings, or
  • the debtor is discharged from bankruptcy, and the debt was incurred before the discharge but not as a result of fraud, or
  • a debtor has died leaving no estate or there are insufficient funds in the debtor's estate to repay the debt.

Act reference: FA(Admin)Act section 95(3) Secretary may write off debt, section 88 Legal proceedings

SSAct section 1231 Deductions from debtor's pension, benefit or allowance

Policy reference: FA Guide 7.3.1 Writing-off a Debt, 7.2.1 Debt Recovery - General Provisions

Last reviewed: 3 January 2017