There is a question we get asked all the time here at Bankruptcy Experts.
Yes, there are debt recovery time limits, with some strings attached.
With each month that passes, it becomes harder for the creditor to recoup the debt.
In fact figures from a recent study state that a debt overdue by just one month has a 93.8% chance of being paid, but this percentage drops to 74% after 3 months and down to 27% after a year.
There’s every chance that a company may write off a debt and claim it as a tax write-off.
But this is by no means a get-out-of-jail free card. As always, don’t assume too much here give us a call for some advice, all is not as it seems.
How long before any particular debt can be written off in Australia?
If someone’s hounding you for repayment of a debt, firstly find out if there’s been any legal action taken against you. In some cases, the creditor will sell the debt to a collection agency to pursue you for the debt, companies such as Credit Corp and Dun & Bradstreet to name a few.
If the debt is more than 6 years since you first incurred it then the creditor can no longer pursue you for the debt?
However, if it’s been over 6 years, the creditor may not be able to enforce the debt against you, providing of course you have taken absolutely no action on that debt during that six years. If you have lived overseas for example for many years and or moved and forgot all about the debt and the creditor couldn’t find you then you should be ok.
But once you admit to owing the debt (by starting to make repayments or even putting a repayment plan in place), then the 6-year debt collection limit can restart.
Statute of Limitations
In legal terms, a creditor has 6 years to collect their debt (from the date due, the last payment made or when the debt was admitted to in writing). However, there are exceptions – the court can issue a judgement which extends this limit to 12, or 15 years in some states.
After the limitation period is up, the creditor no longer has the right to sue for recovery of the debt – it becomes statute-barred.
Once a debt has been statute-barred, all the creditor can do is ask for payment. If the debtor writes to the creditor denying liability on a statute-barred debt, the creditor may be legally obliged to stop all debt-collection attempts.
Find out your options, If you’ve got a debt that’s hanging over your head, find out what your options are first – you may be eligible to have the debt written off. If you have an old debt or just a very painful debt feel free to call us here at Bankruptcy Experts 1300 795 575.
Some people choose to get a copy of their credit file to find out exactly what debts they owe, this is a pretty good option but remember sometimes this file doesn’t show all of your debts, unless the creditor has registered the debt with Equifax then it’s quite possible it’s not recorded on your credit report.
One of the major pluses of bankruptcy if you choose to walk that path is that all debts known or unknown will be written off and you will get a fresh start. Don’t worry if you don’t know what debts you have at the time you file for bankruptcy, even if that debt shows up 2 years into it we can still add it onto your bankruptcy and you won’t have to pay the debt.
If you need to know more about your debts feel free to call us here at Bankruptcy Experts on 1300 795 575.