The Australian Army


What happens to your loan when you separate?

If a member elects to separate from the Regular Army with an amount owing to the Trust, a number of things should and will happen:

  • Firstly, it is a member’s responsibility to take ownership of the fact that there is a liability to the Trust and a repayment arrangement has to be made with the Secretariat prior to the separation date.
  • As a member goes through the separation process, they will be reminded of their obligation to the Trust (by APCD’S / transition cells).


Broadly speaking there are three options:

  • Repay the loan in full prior to separation (by a lump sum payment or by requesting the Secretariat to increase repayments).
  • Providing there is sufficient leave accrued, have the outstanding amount deducted from final pay (this will happen as a matter of course if there is an outstanding liability).
  • If the above two options fail to ensure complete recovery, on separation, the member will receive a debt notice from Defence to repay the outstanding balance.

Should a member ultimately renege on finalising their Trust liability, the matter will be referred to a Collection Agency and, under the terms of the loan agreement, additional collection costs will be charged to the member. Additionally, members may ultimately be ‘listed’ and thus the ability to attract credit impacted. For example, if applying for a bank loan and a credit check is conducted – that credit check will reveal the applicant is a ‘risk’ given the default on finalising the Trust liability.

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