Statute-barred debt in Australia: the time limits by State and the letter to send a collector

In most of Australia, a creditor generally has 6 years to take you to court over an unsecured debt, and in the Northern Territory it is 3 years. The clock usually runs from your last payment or your last acknowledgment of the debt. Once that time has passed, and there is no court judgment against you, the debt is called “statute-barred”. It is not an automatic write-off: the time limit is a defence you raise, and the courts will not enforce the debt through court action.

If a collector is chasing you for an old debt, Claim Done drafts a statute-barred debt letter from your answers for a flat A$49. The letter states that you rely on the time limit and asks them to confirm in writing that they will stop, without admitting the debt or offering to pay.

When a debt counts as statute-barred

The ACCC says you can generally rely on this defence if 6 years have passed since you last made a payment or confirmed the debt, and there is no court judgment against you. In the Northern Territory the period is 3 years. When that is the case, recovery of the debt through the courts is “statute-barred” and the courts will not enforce it.

Three things decide whether your debt fits:

• The date of your last payment or acknowledgment. The joint ACCC and ASIC debt collection guideline says the time limit runs from when the right to sue arose or when you last acknowledged the debt, for example by making a payment.
• No court judgment. The rule described by the ACCC and Moneysmart applies where there is no court judgment against you for the debt.
• The type of debt. Moneysmart describes the rule for unsecured debts. The guideline notes that limitation periods may be different for debts relating to a mortgage over property.

Limitation periods by State and Territory

Each State and Territory has its own Limitation Act. These are the general periods for an ordinary contract debt, read from each official source in November 2026.

Each Act has exceptions, so check the section for your State or get free legal advice if your debt is unusual.

Paying or admitting the debt can restart the clock

This is the trap. ASIC says the limitation period can be revived by a later payment or acknowledgement of the debt. The guideline adds that in some jurisdictions a payment or acknowledgment will restart the period even after the original period has expired.

The Acts set out how this works, and they differ. In Queensland and Tasmania, if you acknowledge a debt or make a payment, the right to sue is treated as starting again on that date, and an acknowledgment must be in writing and signed. In the ACT and the Northern Territory, the Acts describe a signed written acknowledgment or a payment made after the period starts but before it ends. The details matter, so the ACCC’s advice is simple: if you are contacted about an old debt, do not make a payment or confirm the debt in writing until you get legal advice.

That includes small “goodwill” payments, signing a payment plan, or an email that says “yes, I owe this”.

What your letter must say

Moneysmart says you should tell the debt collector why you are disputing the debt. A statute-barred debt letter does that in writing. It should:

• name the creditor or collector and quote their reference number
• refer to it as the “alleged debt”, never “my debt”
• give the date of your last payment or written acknowledgment
• say you rely on the limitation period in your State’s Act, and name that Act
• ask them to confirm in writing that they will not start court action and will stop collecting
• leave out any apology, any offer to pay, any agreed amount and any promise to “sort it out”

The structure of the letter

Claim Done’s letter follows this layout:

1. Your details and the date. Your name and the postal or email address where you want written replies.
2. Their details and reference. The collector or creditor’s name, address and account reference.
3. Subject line. The alleged debt and their reference.
4. The limitation defence. The date of your last payment or written acknowledgment, the Act for your State, and the statement that you rely on the time limit.
5. What you require. Written confirmation within 14 days that they will not start or continue court action and will stop recovery.
6. Complaint options. A general note that you can complain to the Australian Financial Complaints Authority if the business is a member, and a reference to the debt collection guideline.
7. Sign-off. Your name, with nothing that admits the debt.

If your answers show the debt may not be old enough yet, or you have paid or acknowledged it recently, the letter does not claim it is statute-barred. It asks them to verify the debt instead and keeps your rights open.

How to send it and what to keep

The letter comes as a PDF you download straight away and send yourself, by email or post. Moneysmart says you can tell a debt collector how to contact you, for example by email only. Keep copies of all letters and emails, and a note of each contact: the date and time, the collector’s name and company, how they contacted you, and who said what.

If the debt has been sold to another company, Moneysmart says you can still ask for information about it, including who owns it, how much is owed and how the amount was calculated.

What happens next

The ACCC says once you have told the collector the debt is in dispute, collection activity should stop until it is resolved. The guideline also says collectors should not state or imply that legal action will or may be taken when a defence applies, and that doing so for a statute-barred debt may be misleading or deceptive.

If they keep chasing you, Moneysmart says to complain first to the lender or collector, then to the Australian Financial Complaints Authority (AFCA) if the behaviour does not stop. You can also report a collector to the ACCC, although the ACCC does not step into individual disputes.

If you get court papers, do not ignore them

A time limit is a defence. The guideline says limitation laws generally bar the creditor’s remedy if a defence relying on the expired period is filed. If court papers arrive, get free legal advice straight away; Moneysmart warns that ignoring them risks a default judgment. In NSW, the State Library guide says you have 28 days after being served with a statement of claim to file a defence, and that ignoring it will not make it go away. A statute-barred debt is listed there as a common ground of defence.

Mistakes to avoid

• Paying a small amount “to make them go away”.
• Phoning the collector and agreeing that the debt is yours.
• Guessing the date of your last payment. Check bank statements first.
• Mixing up the time limit with your credit report. Moneysmart says a default stays on a credit report for five years (seven for a clearout).
• Ignoring a court document because you believe the debt is too old.

Free help is available from a financial counsellor on the National Debt Helpline, 1800 007 007, and from community legal centres and Legal Aid. When you are ready to put the time limit in writing, start your statute-barred debt letter for A$49.