Debt collection – Old Debts

Do I have to pay an old debt?
If a debt collector has asked you to pay an unsecured debt that is more than six years old (or 3 years in the Northern Territory) it is important to know your rights.

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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.

If a debt is statute barred, you have a defence if someone commences legal action against you to recover the debt.

This page explains:

  • what statute barred debts are and what to do if a creditor or a debt collector has asked you to repay a debt that you think is statute barred; and
  • what to do if a creditor or debt collector is threatening legal action, has commenced legal action or has a court judgment.

If you complete the steps and your debt issue still hasn’t been solved, or you’re feeling overwhelmed, call us on 1800 007 007 to speak to a financial counsellor.

If you’d prefer to chat to a financial counsellor online, you can also use our live chat service by clicking the chat icon in the bottom right corner of your screen.

What to do if you have an old debt

01

Is the debt statute barred?

Limitations Acts (or Statute of Limitations) in each State and Territory place time limits on the rights of a creditor or a debt collector to bring court action for the recovery of debts.  If they do not bring court action within the applicable time limit then the debt may become statute barred.

An unsecured debt might be statute barred if any of the following has not occurred in the past 6 years (or 3 years for the Northern Territory):

  • You have not made a payment
  • You have not acknowledged the debt in writing
  • No court judgment has been entered against you

Once court judgement has been entered, the creditor or debt collector has at least 12 years (or 15 years in South Australia and Victoria) to enforce and collect the debt.  See Step 5 below and our Court Judgments page for more information.

Different rules apply for debts secured by a mortgage over real property (for example, a home loan or a car loan). Ring us if you are being pursued for an old, secured debt.

 

How to check if there is a court judgment

You can find out if a court judgment has been entered against you by:

  • Contacting your local court or magistrates court
  • Asking for details of the court judgment from the creditor or debt collector and then checking with the court
  • Getting your credit report. See Get your credit report.

Warning: A court judgment is listed on your credit file for 5 years from the date of judgment.  If judgment was entered into more than 5 years ago then it will no longer appear on your credit report.

02

What to do if a debt collector says you have to pay an old debt

If you think it might be more than 6 years (or 3 years for Northern Territory) since you last made a payment or acknowledged the debt in writing then:

  • Do not make a payment
  • Do not agree you owe the debt (refer to the debt as the “alleged” debt)
  • Do ask the debt collector to provide copies of the contract and the account statements
  • Do ask the debt collector if they have a court judgment. If they do ask for details including court number, date obtained, which court and the amount of the judgmentCheck with the Court that the judgment has been obtained.
  • Do keep notes of all phone conversations and any letters/emails received or sent.
  • Get advice by calling us on 1800 007 007.

 

How to request documents

You have a right to request copies of the documents that the debt collector is relying on to show you owe a debt.

You can use this letter template to request documents so you can check if the debt may be statute barred.

Depending on the debt being claimed you may need to request other documents. Call us on 1800 007 007 if you need help with this.

03

What if I believe the debt is statute barred and the debt collector does not agree?

What if I believe the debt is statute barred and the debt collector does not agree?

The debt collector should explain why it does not agree the debt is statute barred. Ring us to get some advice as to whether the debt may be statute barred.

You can have the decision of the debt collector reviewed through external dispute resolution in most cases. You can do this for free if the debt collector is a member of an External Dispute Resolution Scheme (EDR).

Refer to Dispute Resolution.

 

If the debt collector does agree the debt is statute barred

Make sure you have this in writing from the debt collector and keep a copy. If you do not have this in writing from the debt collector, you need to make sure there is a record. Do this by writing to the debt collector (eg letter/email) “I confirm that you have agreed the alleged debt is statute barred.” Make sure you keep a copy of this.

04

What if the debt collector is threatening legal action or has commenced legal action?

If the debt is statute barred you have a complete defence to the debt claimed. You should immediately:

  1. Lodge a dispute in a dispute resolution scheme (if the debt collector is a member). The dispute resolution scheme will then decide the dispute; or
  2. Call us to get a referral for legal advice to seek assistance to lodge a defence in court (if the debt collector is not a member of a dispute resolution scheme).

05

What do I do if the debt collector has a court judgment?

A court judgment means that the court has decided you owe the debt to ‘the judgment creditor’.  The judgment creditor then has at least 12 years (or 15 years in South Australia and Victoria) to take further action to recover the debt.  They can apply to court to take and sell goods that are not protected, garnishee your wages or bank account, examine your financial situation in court or make you bankrupt.

The court judgment may be able to be set aside in certain circumstances, for example, you did not know about the court proceedings and you had a defence (a reason why you did not owe part of, or all of, the debt). A defence could be that the debt was already statute barred before the debt collector commenced court proceedings.

Court judgments can also become “old”. This means that the debt collector can no longer enforce the judgment and recover the debt. However, in certain circumstances the court can extend these limitations so get legal advice.

See the Court Judgments page for more information.

06

Speak to one of our financial counsellors

If you’re feeling overwhelmed and need some help to deal with your financial hardship, you can speak with one of our financial counsellors.

Financial counsellors aren’t judgmental about your circumstances – they’re here to offer you free, confidential and independent advice and assistance.

To speak to a financial counsellor you can:

  • Call the National Debt Helpline on 1800 007 007 – open Weekdays from 9:30 am to 4:30 pm.
  • Use our live chat service by clicking the chat icon in the bottom right corner of your screen. Live chat is available 9:30am-4:30pm weekdays. If you send a message outside these hours a financial counsellor will get back to you.
  • Make an appointment to see a financial counsellor in your local area – Find a local Financial Counsellor.