Waiver of debts—settlement of civil actions
198 Waiver of debts—settlement of civil actions
Settlement of civil action
If the Commonwealth has agreed to settle a civil action against a debtor for recovery of a debt for less than the full amount of the debt, the Secretary must waive the right to recover the difference between the debt and the amount that is the subject of the settlement.
Settlement of proceedings before the ART
If the Secretary has agreed to settle proceedings before the ART relating to recovery of a debt on the basis that the debtor will pay less than the full amount of the debt, the Secretary must waive the right to recover the difference between the debt and the amount that is the subject of the settlement.
See section 273A (which deals with settlement of proceedings before the ART).
Waiver where at least 80% of debt recovered and debtor cannot pay more
If:
the Commonwealth has recovered at least 80% of the original value of a debt from a debtor; and
the Commonwealth and the debtor agree that the recovery is in full satisfaction for the whole of the debt; and
the debtor cannot repay a greater proportion of the debt;
the Secretary must waive the right to recover the remaining 20% or less of the value of the original debt.
Agreement for part payment in satisfaction of outstanding debt
If the Secretary and a debtor agree that the debtor’s debt will be fully satisfied if the debtor pays the Commonwealth an agreed amount less than the amount (the unpaid amount) of the debt outstanding when the agreement is made, the Secretary must, if the agreed amount is paid, waive the right to recover the difference between the unpaid amount and the agreed amount.
Limits on agreement to accept part payment in satisfaction of outstanding debt
The Secretary must not make an agreement described in subsection (4) unless the Secretary is satisfied that the agreed amount is at least the present value of the unpaid amount if it is repaid in instalments of amounts, and at times, determined by the Secretary.
Working out present value of unpaid amount
For the purposes of subsection (5), the present value of the unpaid amount is the amount worked out in accordance with the following formula:
Start formula start fraction Annual repayment over Settlement interest end fraction times open square bracket 1 minus start fraction 1 over open round bracket 1 plus Settlement interest close round bracket superscript rp end fraction close square bracket end formula
where:
annual repayment is the amount of the debt that the Secretary believes would be recovered under Division 5 in a year if subsection (4) did not apply in relation to the debt.
rp (short for repayment period) is the number of years needed to repay the unpaid amount if repayments equal to the annual repayment were made each year.
settlement interest is an annual rate of interest prescribed for the purposes of this subsection by the PPL rules.
This Act’s bill:Explanatory memorandumSecond reading speech
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