![]() ![]() on which the debt became due and payable.2 – Determine the Start Time for the Debtįor most debts, a creditor must begin court action to recover the debt within six years (or three years in the NT) of the date: Generally, the place of the debtor’s residence at the time of entering into the contract is relevant in determining the governing jurisdiction (although this can be varied in the contract itself). Some general points to consider when dealing with statute barred debts include: 1 – Identify the Governing Jurisdiction The table below summarises the broad application of the statute of limitations in each Australian state and territory. Once this is determined, the application of the relevant tax laws will follow. The limitation period will be different for secured debts and debts arising “out of deed”.Īs the laws vary from state to state, to ensure that the debt is in fact a statute barred debt, it would be prudent to seek legal advice as these laws can be complex. Very broadly, a “simple contract” in respect of a debt typically includes unsecured personal loans, credit card debts or debts sold or referred to a collection agency. Specifically, each state and territory in Australia contains its own “statute of limitation” provisions that provide a procedural basis for a lawsuit for non-payment of a debt, including a time limit, which can be used as a defence against the claim from creditors.įor debts that arise from “simple contracts”, the limitation period is six years, with the exception of the Northern Territory where it is three years. In simple terms, a statute barred debt is when it has reached a statutory limitation period where it can no longer be legally recovered by creditors. So what is statute barring and when can it be a problem? ![]() ![]() Various tax implications can arise with a statute barred debt. ![]()
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