Is It Necessary To Pay Off an Old Debt?

Is It Necessary To Pay Off an Old Debt

It would be nice to be free of any kind of debt. For a lot of people, having debts can weigh heavily on their minds.

When it comes to business transactions though, you should be aware of what kind of a position you’re in and whether or not you are obligated to pay up.

Depending on the type of debt and how old the debt is, if it is over six years old then it is considered “Statute-Barred”. Simply put, you are not legally obligated to pay it off.

A debt is considered statute-barred if it is more than six years old. You may also not need to pay if there have been no repayments on the debt in the last six years. If there has been no legal action taken against you, then the debt is also considered statute-barred. Lastly, if you haven’t admitted in writing that you owe anyone in the last six years, then the debt is also statute- barred.

However, there are some exceptions to this rule. The limitation of liability can extend from 6 to 15 years. If this is the case then:

  • The debt is on a mortgage on a car or house.
  • A court settlement states that there is debt owed.

Whatever the case may be, it is always wise to contact professionals whenever an old debt is brought up.

What To Do When A Debt Collector Contacts You

If your memory fails you and you are unsure if an old debt is statute-barred or not, you have to be careful about the way you respond and contact a professional as soon as possible.

Until you see evidence that a debt owed isn’t statute-barred or that a court order hasn’t been registered against you, be mindful about doing the following things:

  • Don’t make any payments towards the debt.
  • Don’t admit in writing that you have a debt.
  • Make sure to talk to a professional.
  • Request all relevant documents that pertain to the debt, including contracts you may have signed and account statements.

Do bear in mind that making payments as well as acknowledging in writing that you owe a debt will only reset the 6-year limitation of liability period. Simply put, your debt won’t be statute-barred anymore.

When the Law is Involved

What if a debt collector claims that a case has been filed against you? Usually the words “court proceedings” and “legal matters” can make most people buckle. Don’t make the mistake of doing so.

If their claims are indeed true, then you would have been issued court documents confirming that a court judgement has been entered against you. The lender might have done so, or the debt collection agency.

A legal document called a Form 5A or Complaint means that legal proceedings have begun. If you receive such a document, you have 21 days to draw up your defence on the Form 5A and submit it to the magistrates’ court that served the papers.

Don’t forget to always request for any pertinent documents regarding the debt concerned from the lender and the debt collection agency so that you can come up with a defence that is accurate and complete.

Always seek the advice of a professional before assuming that whatever a debt collector claims is true. Make it a point to also keep a record of communication between you and the debt collector and/or lender.

For any debt-related matters, feel free to contact the following organisations:

There are a number of organisations that can provide free advice related to debt matters:

Consumer Action Law Centre

Telephone: (03) 9629 6300,
or 1800 466 477 for country callers.

If you are deaf or have a hearing or speech impairment, you can call through the National Relay Service (NRS): TTY users can phone 133677 then ask for 1800 466 477
Speak & Listen (speech-to-speech) users can phone 1300 555 727 then ask for 1800 466 477

Internet relay users can connect to NRS on then ask for 1800 466 477

Credit Ombudsman Service

Tel: 1800 138 422

Financial Ombudsman Service

Tel: 1300 78 08 08


Telephone: 1800 007 007

Contact JMA Credit Control

Don’t burden yourself with debts and debt collection. Get in touch with us so you have more time to focus on other important matters regarding your business. When it comes to financial affairs, only partner with a reputable debt collection agency that firmly believes in an ethical and professional approach to handling unpaid invoices and long overdue payments.

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