Debt Collection: Statute of Limitations

All Australian states have a statute of limitations regarding debt collection. Essentially, it limits consumers’ legal liability for old debts.

Since it’s a state statute as opposed to a national statute, the limitations for debt recovery action will vary depending on where each person lives. That said, each state has a “time-barred debt” which is effectively an expiry date on the actual debt.

Debt Collection: Statute of Limitations

Should a creditor take you to court or attempt to sue you for old debts, your lawyer can potentially cite the expiry date. A lawsuit being dismissed by the courts is a common outcome but it isn’t guaranteed.

Debt expiry dates

A common mistake around Australia is where individuals falsely believe that their old debt is simply disposed of after a set period of time. This isn’t the case.

Your debt is yours until it’s paid off. Yes – even in 70 years from now!

To be clear, let’s talk about the difference. Here the difference is that creditors legally cannot collect from an individual if the courts are made aware of the expired statute.

There are instances where debtors may be forced to pay a time-barred debt. How so? Where the individual didn’t previously make this known to the court.

Now, it’s important to know that the state of residence for an individual is not the only element that gives a time frame for creditors to file a lawsuit. There is also the type of debt that the individual owes to the creditor. Generally, very small loans and small credit cards are unlikely to receive much interest from debt collectors.

Resetting the Limit

A single set time limit does not exist. For example, simply making a payment or promising to make a payment automatically resets the clock. Further more, the clock doesn’t start until approximately 6 months after the last payment made on the debt.

So, effectively, new payments, no matter how insignificant, can actually renew your old debt. There’s even some dodgy debt collectors using manipulation and tricks to make individual make tiny payments on to old debts. This way the clock keeps resetting, and they expand their collection time (including court action).

Get some real help

You really need proper legal representation here. Our knowledge of both federal and state laws is limited. We’re simply a community of people that genuinely care about you

We recommend that you contact your lawyer if you need specific information. If you’re struggling with debt, and need someone to talk to on a personal basis for free, then we can help. We can even sort of the debt collection guys so you don’t have to talk to them.

Reach out today. Let us work together to help make things right before it all gets out of hand.

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