This website is for use by legal professionals (lawyers and law practices) only. If the information is used incorrectly, you could risk losing money or your legal rights. If you are a member of the public looking for free advice about your legal problems please visit legalaid.vic.gov.au, or contact our Legal Help advice line on 1300 792 387, Monday to Friday from 8 am to 6 pm. 

If you decide to use or rely on the information or make decisions based on the information in this website (which VLA does not recommend) VLA is not liable to you or any third party in any way for any loss, damage, costs or expenses you or they may suffer or incur as a result.

Old debts

Information to warn people about debts that have been statute barred.

There is a time limit for recovering money that is owed. The time limits are set out in the Limitation of Actions Act 1958 (Vic)(opens in a new window).

Statute barred debts

A debt that is no longer able to be acted on by the lender is sometimes referred to as being 'statute barred'. A debt collector may be acting unconscionably if they try to recover a debt from someone if the debt been statute barred.

See Collection House Limited v Taylor [2004] VSC (3 March 2004)(opens in a new window).

Time limits

The time limit for this is 6 years for most debts (made under simple contracts). The time is calculated from the date that payment was due. This period is longer if:

  • the debt involves real estate (15 years)
  • a judgment has been entered in court against the person who owes the money (15 years)
  • if the loan involves a mortgage for example, for a home or a vehicle (15 years).

How time is calculated

Time is calculated from the most recent of these dates:

  • date that payment was due
  • date that the last payment was made
  • date the debtor admitted (in writing) that they owed the money.

The debt is statute barred six years from the last date that one of these events happened.

If the debt has been proven in court

If a judgment is entered in court for a debt the 15 years time limit is calculated from the date that of the judgment.

If the debt involves a mortgage

The date is calculated from the date that the mortgage is due to end. This includes the principal sum that was borrowed and does not include interest. Any claim for interest must be made within 6 years.

See s. 20—Limitation of Actions Act 1958 (Vic)(opens in a new window) and Law Handbook 'Statute barred debts' in Are you in debt?(opens in a new window)

Judgment in court

The time for chasing a debt is extended if the creditor takes the matter to court. This is sometimes called 'proving the debt'. If a judgment is entered into the court record the creditor then has 15 years to act to recover the money.

To check if a judgement has been entered for the debt against, the debtor can contact the Magistrates Court (see link below).

If a debtor believes that the debt is more than 6 years old they should get legal advice immediately. The debt collector is not allowed to imply that the money is owed if they know that the debt has been barred under the Limitation of Actions Act 1958 (Vic)(opens in a new window).

More information

Legislation

Limitation of Actions Act 1958 (Vic)

  • s. 5—contracts and torts—actions that shall not be brought after 6 years have passed
  • s. 5(4)—an action shall not be brought on any judgment after 15 years have passed
  • s. 19—actions to recover rent cannot be brought after 6 years
  • s. 20—action to recover money if secured by a mortgage or charge
  • s. 24—extension of the limitation period if the person makes a part payment or acknowledges the debt
  • s. 25—acknowledgement must be in writing and signed by the person making the acknowledgement (debtor)

See Limitation of Actions Act 1958 (Vic)(opens in a new window).

Consumer Action Law Centre (CALC)

This specialist community legal service has a fact sheet about debts that may have been statute barred. The first sheet includes a sample letter for a debtor to warn a debt collector that the debt is statute barred.

See:

  • 'Do I have to pay an old debt?'
  • 'How do I get a copy of my credit report?'

in 'Debt collectors' tab under Consumer Action Law Centre—Fact sheets(opens in a new window).

For legal advice see Consumer Action Law Centre—Legal Help(opens in a new window).

The Law Handbook

Fitzroy Legal Service’s Law Handbook has information about statute barred debts.

See 'Statute barred debts' in Are you in debt?(opens in a new window)

The Magistrates Court of Victoria

A person can contact the magistrates court to see if a judgment has been entered against them.

See 'Procedural information' and 'Enforcement of a civil debt' in Magistrates' Court—Civil matters(opens in a new window).

For contact details see Magistrates' Court of Victoria(opens in a new window).

Australian Securities and Investments Commission (ASIC)

The ASIC site has a 2005 report about collecting statute barred debts.

See 'Collecting statute-barred debts' in ASIC—Debt collection(opens in a new window).

Updated