In most of Australia, a creditor has six years from the date a debt became due to take you to court over it. The Northern Territory shortens that to three years for simple contract debts, and court judgments and mortgage-secured debts run longer — up to 12 or 15 years depending on the state. So how long a debt can be chased in Australia depends on where the debt arose, what type of debt it is, and whether anything you’ve done in the meantime has restarted the clock.
After the limitation period expires, the debt becomes “statute-barred.” The creditor can still ask you to pay, but a court generally won’t force you to.
Time Limits by State and Debt Type
Each state and territory sets its own limitation period through its Limitation Act, so the applicable window depends on the jurisdiction where the debt arose.
Credit Cards, Personal Loans, and Unpaid Invoices
For everyday unsecured debts, the limitation period is six years in New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania, and the ACT. The Northern Territory is the outlier at three years for debts arising from simple contracts that aren’t executed as deeds.1AustLII. Limitation Act 1981 – Sect 12 Actions in Contract, Tort Etc.
If you live in the Northern Territory and you’re carrying old credit card or personal loan debt, that shorter window matters. Three years passes quickly.
Court Judgments
If a creditor has already sued and obtained a judgment against you, they have longer to enforce it. In most jurisdictions the enforcement window is 12 years from the date of the judgment. Victoria and South Australia extend it to 15 years.2Victoria Legal Aid. Reasons You Might Not Have to Pay Your Debt
Mortgages and Other Secured Debts
Home loans, car loans, and other debts secured against property carry longer limitation periods than unsecured debts. In Victoria, the period is 15 years for the principal amount borrowed.2Victoria Legal Aid. Reasons You Might Not Have to Pay Your Debt In New South Wales, it’s 12 years to recover the principal but only six years for unpaid interest. The exact figures vary by state.
When the Clock Starts
The limitation period begins on the date the debt first became due and payable. For a credit card, that’s typically when you first missed a required payment or when the creditor issued a default notice. For an invoice, it’s the day after the payment deadline passed.3ACT Government. Statute Barred Debt Policy
The clock is not tied to when the creditor first contacted you, and it doesn’t restart when the debt is sold to a collection agency. It’s anchored to when the debt became legally recoverable, and everything else flows from that date.
What Restarts the Clock
This is where most people trip up. Two things consistently restart the limitation period across Australian jurisdictions and hand the creditor a fresh window to sue.
- Making a payment. Even a small part-payment restarts the limitation period from the date of that payment.3ACT Government. Statute Barred Debt Policy
- Acknowledging the debt in writing. Signing a repayment arrangement, sending an email confirming you owe the money, or even requesting a statement for “your” account can count as written acknowledgment and reset the clock.
The written acknowledgment trap catches people off guard. A collector phones you about a five-year-old credit card balance and you reply with an email saying “I know I owe this but I can’t pay right now.” That email alone could restart the entire six-year period. The key word is “written.” A verbal admission over the phone generally does not reset the limitation period, because Australian limitation statutes require the acknowledgment to be in writing.
A creditor also preserves their right to pursue the debt by filing court proceedings within the limitation period. Once the lawsuit is lodged in time, the limitation clock stops mattering for that action, even if the case takes years to resolve.
What Statute-Barred Actually Means
Once the limitation period runs out without a payment, written acknowledgment, or court action, the debt is statute-barred. If a creditor then sues you, you can raise the expired limitation period as a complete defence and the court will generally dismiss the claim.3ACT Government. Statute Barred Debt Policy
Statute-barred is not the same as erased. The debt still technically exists and you still technically owe it. What the creditor has lost is the legal mechanism to compel payment. They can still write to you, still phone you, and still ask for voluntary payment. Some do.
Your Credit Report Runs on a Different Clock
How long a debt can affect your credit file is a separate question with a separate answer. Under the Privacy Act 1988 and the Credit Reporting Code, a default listing stays on your credit report for five years from the date the credit provider lodged the listing with the credit bureau.4OAIC. What Stays on a Credit Report?
Paying the default doesn’t get it removed early. The bureau can update the listing to show “paid,” but the entry itself stays for the full five years, then must be removed regardless of whether you paid.
The five-year credit reporting window and the six-year limitation period overlap but are not linked. A debt can drop off your credit file while the creditor still has time to sue. Or a statute-barred debt can still appear on your credit report if it was listed less than five years ago.
If a Collector Contacts You About an Old Debt
The ACCC and ASIC jointly enforce the consumer protection laws that apply to debt collection.5Australian Competition and Consumer Commission. Debt Collection Guideline for Collectors and Creditors – April 2021 Collectors are prohibited from using physical force, undue harassment, misleading or deceptive conduct, and unconscionable behaviour.
On statute-barred debts, those rules bite hard. A collector who threatens court action over a debt they know is statute-barred is engaging in misleading conduct, because a lawsuit is no longer a real option. ASIC has specifically investigated cases where collectors pressured people into paying old debts by implying legal action was imminent when it wasn’t legally available.6Australian Securities & Investments Commission. Report 55 Collecting Statute-Barred Debts
A collector can still contact you to ask for voluntary payment. There is a line between a polite request and pressure tactics, and regulators take that line seriously. If a collector is threatening court, demanding payment under false pretences, or calling at unreasonable hours about an old debt, you can report the conduct to the ACCC or ASIC.
Where to Get Free Help
The National Debt Helpline provides free, confidential financial counselling on 1800 007 007, weekdays 9:30 am to 4:30 pm.7National Debt Helpline. Financial Counselling A financial counsellor can help you work out whether a specific debt is statute-barred, what to say (or not say) to a collector, and where you stand. You should never be asked to pay for this kind of counselling, and if you are, that is itself a warning sign.
Legal aid services in each state and territory also provide free advice on debt disputes, particularly if a creditor is acting improperly or you need help raising a limitation defence in court.