At LCollect we believe that knowledge is power. Every month our debt collection blog gives you practical tips, stories and news from around Australia and the world.
It has been some time since we looked at the impact of the Statute of Limitations in debt collection so we thought that an update might be worthwhile as a refresher not only for our long-term subscribers but also those that have recently subscribed to this blog and our newsletter.
What Are Statute Barred Debts?
Statute Barred debts are debts to which the appropriate limitation period has expired for the debt to be collected. Across each State and Territory of Australia the limitation period varies from 3 years to 15 years.
The table below summarises the limitation period for each State and Territory:
It should be noted that in the table above that the limitation periods stated only apply to unsecured personal loans and credit cards (overdrafts, line of credits, etc). These are typically referred to as "simple contracts" and Court Judgments.
When Does the Limitation Period Start?
The limitation period starts from what is referred to as a "right of action". While not particularly straightforward a right of action can be interpreted as when a debt becomes due, either because a contractual repayment is required, or because an instalment that fell due is defaulted on as set out in the contract.
Can The Limitation Period Be Extended?
The limitation period can be extended when payment is received or the customer acknowledges the debt. There are other circumstances that may extend the limitation period, specifically relating to a Judgment Debt, however you should seek your own independent legal advice concerning this.
How Is A Debt Acknowledged?
The legislation surrounding the limitation period is very specific in relation to what must occur for the debt to be acknowledged. The acknowledgement must: