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How Long Can Debt Collectors Chase You in Australia?

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If a debt goes unpaid, you’ll face debt collectors and action from your lenders. This can cause quite a bit of stress, especially if you’re not sure what steps to take next. In a perfect world, no debt would ever go unpaid. Unfortunately, things happen, and sometimes debt piles up. However, like all legal matters, debt is subject to a statute of limitations. This means there is a limit to how long a debt can be chased in Australia.

So, how does this work, and when does it apply to you? There are strict rules debt collectors must follow, and it’s important to be educated so you can protect your wellbeing. Whether you’re being contacted by debt collectors or you’re struggling with unpaid debt, equip yourself with knowledge. In this guide, we’ll explore how long a debt can be chased in Australia.

Being chased by debt collectors can be an incredibly stressful and anxious experience Knowing your rights and the limitations that apply to debt collectors in Australia is important to reduce this stress This article will explain how long debt collectors can legally pursue you for unpaid debts in Australia.

What is the Time Limit for Debt Collection in Australia?

The time limit that applies to debt recovery and collection in Australia is called the statute of limitations. This specifies how long after a debt becomes overdue that the creditor or collector has to begin court action to recover the debt.

The standard statute of limitations timeframe in most Australian states and territories is 6 years. However, it is just 3 years in the Northern Territory.

The 6 or 3 year period generally starts from the earliest of:

  • The date the debt originally became due for payment
  • When you last made a payment on the debt
  • When you last acknowledged the debt in writing

Making a payment or acknowledging the debt in writing resets the clock and the time limit starts again.

Once the statute of limitations period ends, the creditor or collector is barred from starting legal action to recover the debt. However, the debt still exists and you are still legally liable for it.

What Happens When the Time Limit for Debt Collection Expires?

Once the statute of limitations timeframe has passed, the creditor or collector is prohibited from commencing legal proceedings to recover the debt. However, this does not erase the debt completely.

Even though legal action cannot be taken the creditor or collector can still attempt to

  • Contact you to request repayment
  • Negotiate a repayment plan with you
  • Offer a reduced settlement amount to clear the debt

Importantly, they cannot use deception, falsely imply you have a legal obligation to repay, or threaten legal action they cannot take.

The debt continues to be recorded on your credit file for 5 years from the date of last payment or written acknowledgement. It can still impact your credit score and ability to access further credit.

What Type of Debts Does the Time Limit Apply To?

The standard 6 year (or 3 years in Northern Territory) statute of limitations applies to most unsecured personal debts including:

  • Credit cards
  • Personal loans
  • Payday loans
  • Bills from doctors, dentists etc
  • Old utility bills

Secured debt like mortgages and car loans secured against the asset have different limitations, allowing legal recovery action over a longer time period.

Government fines and child support also have different rules and time limits.

What Should You Do if a Debt Collector Contacts You About an Old Debt?

If a debt collector contacts you seeking to recover a debt that you think is over 6 years old, there are important steps to take:

  • Do not make any payment towards the debt
  • Do not acknowledge that you owe the alleged debt
  • Request copies of statements & contracts from the collector to verify details
  • Ask if they have a court judgement and if so, verify this with the court
  • Keep detailed records of all communication with the collector

If you believe the debt is statute-barred, contact the collector in writing to confirm their acceptance of this. If they do not accept it is statute-barred, contact an external dispute resolution scheme.

Your Options If You Owe An Old Out of Statute Debt

If you agree you still owe the debt and want to take responsibility for it, even though statute-barred, you can:

  • Negotiate a reduced repayment plan based on what you can afford
  • Offer to settle the total amount owed for a reduced lump sum payment

If you are facing financial hardship, explain your situation and request an appropriate arrangement. Be honest about what you can afford.

Alternatively, if paying the debt would cause serious financial difficulty, you could choose not to repay it given the legal limitations. Just be aware it may still impact your credit rating.

How to Stop Debt Collectors Contacting You

If debt collectors are causing you distress or anxiety by frequently contacting you, there are things you can do:

  • Inform them you are experiencing financial hardship and request they cease contacting you.
  • Lodge a complaint with the external dispute resolution scheme if they persist.
  • Block their calls and do not respond to any further communication attempts.
  • Seek legal assistance with issuing a cease contact letter.

The important thing is to not feel pressured or harassed. You have options, rights and limitations on what debt collectors can legally do.

Knowing the statute of limitations is critical when dealing with debt collectors chasing old debts. In most of Australia this 6 year time limit prevents legal action, although it does not extinguish the debt completely. Handle old debts carefully, keep detailed records, and don’t hesitate to seek professional advice. Debt collectors ultimately just want to be paid, so honest communication about your financial situation is key.

how long can debt collectors chase you in australia

Standard Limitation Periods for Debt Recovery

Jurisdiction Limitation Period Relevant Legislation
New South Wales (NSW) 6 years Limitation Act 1969 (NSW)
Victoria 6 years Limitation of Actions Act 1958 (Vic)
Queensland 6 years Limitation of Actions Act 1974 (Qld)
South Australia 6 years Limitation of Actions Act 1936 (SA)
Western Australia 6 years Limitation Act 2005 (WA)
Tasmania 6 years Limitation Act 1974 (Tas)
Australian Capital Territory 6 years Limitation Act 1985 (ACT)
Northern Territory 3 years Limitation Act 1981 (NT)

These periods typically commence from the date the debt became due, the last payment was made, or the debtor acknowledged the debt in writing.

What Are Debt Collectors Not Allowed to Do?

If you notice debt collectors doing any of these things below, report their actions immediately. Debt collectors are held to standards under the Australian Consumer Law (ACL). This means they cannot do any of the following:

  • Use physical force
  • Harass you unreasonably
  • Provide any false or misleading statements
  • Trespass on property
  • Verbally abuse you
  • Take advantage of any disability
  • Threaten legal action they don’t intend to pursue
  • Falsify court documents

This doesn’t just apply to you. While debt collectors are allowed to contact family members, they cannot harass them either. During all contact with family, debt collectors cannot reveal any information about your financial situation. This is all confidential and protected.

The best way to deal with debt collectors is to be cooperative and to make sure they’re being respectful. Be honest and upfront about your debt and ability to pay. If you’re not sure what to do next, contact a financial expert like the team at Debt Busters. A professional agency can represent you in these matters, taking over all negotiations with debt collectors so you no longer have to worry about them contacting you.

How Long can Debt Collectors Chase You?

FAQ

How long until a debt is written off in Australia?

You might not have to pay an old unsecured debt if it has been more than 6 years (or 3 years in the Northern Territory) since you last made a payment or acknowledged the debt in writing. This is called a statute barred debt.

How long can a debt be chased in Australia?

A debt may be ‘Statute Barred’ (too old to pursue) because the Limitations of Actions Act 1958 (Vic) places a time limit on how long a creditor has to take legal action to recover a debt. For most debts, a creditor must begin court action to recover the debt within six years of the date you: Last made a payment.

What happens after 7 years of not paying debt in Australia?

Most civil debts in Australia expire and are statute barred from collection after SIX years – if Court action has not been commenced against you. If a Court has entered JUDGEMENT against you – then the debt remains valid and collectable for 12 years from the date of judgement. This is for CIVIL debts.

What happens if you ignore debt collectors in Australia?

A ‘claim’ is a court form which says you owe money. If you ignore the claim the Court assumes that you owe the full amount and will make judgment against you.

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