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Suspended debts

Centrelink has the ability to suspend, either for an indefinite or specified period of time, all action to recover a debt. This is often known as writing-off the debt, however, suspending the debt does not completely extinguish it.

Under what circumstances will Centrelink suspend a debt?

Debts can only be suspended or 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 suspending a debt completely cancel it?

Suspending or writing-off a debt 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 [see Social Security Act 1991 (Cth) s 1236(3)].

Suspended debts  :  Last Revised: Thu Sep 20th 2018
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.