How long can a debt be chased in Australia after?

Debts in Australia: Time Limits and Implications

Time Limits on Enforceability

In Australia, most debts become unenforceable after a period of six years, as per the Limitation Act 1969. In the Northern Territory, this period is reduced to three years. This means that after this time, creditors lose the legal authority to take action against debtors to recover the unpaid amount.

Exceptions to the Time Limit

However, it’s important to note that the expiration of the time limit does not automatically erase the debt itself. The underlying obligation to repay the debt still exists, even if it cannot be legally enforced. There are certain exceptions to the time limits, including:

• Acknowledgments and Promises: If the debtor acknowledges the debt in writing or makes a new promise to pay, the time limit resets.
• Trusts: Debts owed to a trust may not be subject to the time limits.
• Fraud or Concealment: If the debtor fraudulently concealed the debt or prevented the creditor from taking legal action, the time limits may not apply.

Collectors’ Options After Time Limit

Even though creditors may be unable to enforce debts after the time limit, collection agencies and debt collectors may still attempt to contact debtors and request payment. They may use various methods, such as phone calls, letters, and even home visits. However, their options for legal action are severely restricted.

Consequences of Ignoring Debt Collection Attempts

Ignoring debt collection attempts can have negative consequences, even if the debt is unenforceable. Creditors may report the unpaid debt to credit reporting agencies, which could damage the debtor’s credit score. This can make it difficult to obtain loans, credit cards, or other financial products.

Recommendation for Debtors

If a debtor has an outstanding debt that has passed the time limit for enforceability, it is advisable to contact the creditor and inquire about the status of the debt. The creditor may be willing to negotiate a settlement or possibly forgive the debt if they believe it is uncollectible.

Conclusion

While debts in Australia generally become unenforceable after six years, the underlying obligation to repay the debt remains. Collectors may still attempt to contact debtors, but their options for legal action are limited. Debtors should be aware of the consequences of ignoring debt collection attempts and consider contacting the creditor to discuss the debt’s status.