(1) A debt is uncollectible by the department if the department has determined that:

(a) the debt is owing to the department;

(b) the debtor has either not pursued available administrative due process within the department or has failed to prevail in the available administrative due process within the department or in any appeal from that administrative due process to the state or federal courts;

(c) the debtor has failed to pay the debt after the department has made all reasonable efforts to collect the debt; and

(d) the department has no administrative means such as recoupment from current payments by which to recover the debt.

(2) The department has made all reasonable efforts to collect a debt when the debt remains owed in whole or in part after:

(a) the department has utilized appropriate notices directed at the debtor's last known address to inform the debtor of the debt owed and the debtor cannot be contacted; or

(b) the department has provided the debtor with an opportunity to enter into a repayment agreement based on a schedule for debt repayment that the department determines is appropriate and the debtor has failed to cooperate or the debtor is failing to repay the debt.

(3) A debtor is failing to repay a debt when the debtor has failed to make a monthly or other payment for which the department has mailed notice of delinquency, including a demand for cure of the delinquency within ten days from the date of mailing.