How Long Do Debts Last in Australia?

There are certain time limits that a creditor has to pursue an old debt before it becomes too old to pursue legal action.

This article is for you if you currently have an old outstanding debt and want to know:

  • How long does a creditor have to take legal action
  • What your rights are
  • What you can do when a creditor or collection agency contacts you about an old debt

Because the limitations period for the recovery of debts is governed by state, not national legislation, different jurisdictions will have different limitation periods. Although the majority of jurisdictions in Australia provide standard limitation periods as follows:

  • 6 years for the recovery of debts under simple contract
  • 12 years for debts pursuant to a Court Judgement (15 years in some states)
  • 15 years for debts that relate to a mortgage over property

The slightly different timeframes in different states can make it difficult to know exactly what limitation period applies to your debt before it becomes “Statute Barred” (too old to pursue), so it’s important that you correctly identify the applicable legislation for a given debt before taking any action.

In the case of most debts the limitation period begins from the date…

  • The debt was first due
  • You last made a payment on the debt
  • You last acknowledged in writing that you owed the debt

This again can make it difficult to know if a debt is Statute Barred or is still within the limitation period, depending on the records you have regarding the matter.


Can I Wait Until my Debt Becomes Statute Barred?

Waiting for a debt to become statute-barred in Australia is a strategy that comes with both legal and financial implications. Here are some key considerations:

Legal Implications

Statute of Limitations: In Australia, the statute of limitations on debt varies by state and type of debt, generally ranging from 6 to 15 years. Once a debt becomes statute-barred, creditors cannot take legal action to enforce the debt. However, this does not mean the debt is erased; it simply means the creditor cannot use the court system to collect it.

Acknowledgment and Payment: If you make a payment or acknowledge the debt in writing within the limitation period, the clock resets, and the limitation period starts anew. This is a critical aspect to consider if you’re thinking of waiting out the period for the debt to become statute-barred.

Financial and Ethical Considerations 

Credit Impact: While a creditor may not be able to enforce a statute-barred debt, the existence of an unpaid debt can still impact your credit report and score. This can affect your ability to obtain loans, mortgages, or other financial products in the future. 

 Debt Collection Practices: Creditors or debt collection agencies may continue to contact you to recover the debt until it becomes statute-barred. This can lead to stress and potential harassment, even if they can’t legally enforce the debt. 

Ethical Considerations: There’s an ethical dimension to consider in deliberately avoiding debt repayment. It’s important to assess your financial situation and, if possible, engage with creditors to find a resolution that works for both parties.Strategic Considerations 

Financial Management: If you’re struggling with debt, consider seeking financial advice or counselling. There may be strategies or programs available to help you manage your debt more effectively without having to wait for it to become statute-barred.

Negotiation with Creditors: Creditors are often willing to negotiate payment plans or settlements. This can be a more proactive and positive approach to managing debt, potentially allowing for a resolution that avoids the negative impacts on your credit rating.

While legally you can wait for a debt to become statute-barred in Australia, this approach should be carefully considered against the potential legal, financial, and ethical implications. It’s often more beneficial in the long term to seek a constructive resolution to outstanding debts, either through negotiation, payment plans, or financial counselling.

How can a debt collection agency help with my outstanding debt in Australia?

In Australia, a debt collection agency can play a significant role in managing and resolving outstanding debts. These agencies are often employed by creditors to collect debts on their behalf or may purchase outstanding debts from creditors at a fraction of the face value and then seek to collect the full amount.

Here’s how a debt collection agency can assist in dealing with outstanding debts:

1. Communication and Negotiation

Liaison: Debt collection agencies act as intermediaries between the debtor and the creditor. They facilitate communication, which can be beneficial if direct discussions have broken down.

Negotiation: They can negotiate repayment terms that align with your current financial situation. This might include setting up a payment plan that spreads the debt over a manageable period.

2. Payment Plans and Settlement Offers

Flexible Payment Plans: Agencies often have the authority to offer flexible payment arrangements, making it easier for you to manage repayments alongside your other financial commitments.

Settlement Offers: In some cases, they may be able to offer a settlement that is less than the total amount owed. This can be a mutually beneficial solution, allowing you to clear the debt at a reduced cost while the creditor recovers a portion of the outstanding amount.

3. Financial Guidance

Debt Advice: While their primary role is to collect debts, some collection agencies may also provide advice or suggestions on managing your debt more effectively.

Referral to Financial Counselling: If you’re facing financial hardship, they might direct you to free financial counselling services that can help you get your finances back on track.

4. Legal Framework Understanding

Legal Obligations: Debt collection agencies are well-versed in the legal aspects of debt collection, including the statute of limitations and consumer rights under Australian law. This ensures that all collection practices are compliant with legislation such as the Australian Consumer Law and the National Consumer Credit Protection Act.

Dispute Resolution: If there are disputes regarding the legitimacy or the amount of the debt, collection agencies can help clarify these issues and work towards a resolution.5. Credit Reporting

Credit Information: Agencies can inform you about how your debt may impact your credit score and what you can do to mitigate this impact. They can also advise on the process of updating or correcting information on your credit report once the debt is settled.


While debt collection agencies can offer various services to help manage outstanding debts, it’s important to know your rights when dealing with them. In Australia, the conduct of debt collection agencies is regulated to protect consumers from unfair practices. Agencies are required to adhere to the guidelines set out by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).


The Takeaway

JMA Credit Control stands out as a premier debt collection agency in Australia, offering specialised services designed to assist businesses in effectively managing and recovering outstanding debts.

Whether it’s through negotiating favourable repayment terms, offering expert advice on credit management, or employing strategic collection techniques, we are equipped to help businesses navigate the complexities of debt recovery. By partnering with JMA Credit Control, businesses can focus on their core operations, secure in the knowledge that their debt recovery needs are being addressed by professionals, ultimately leading to improved financial health and sustainability.

Get in touch with us here.

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