Under the Limitation of Actions A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. 1958 (Vic) (‘LOA Act’), a The person or organisation to whom a debtor owes a debt. only gets a limited amount of time to To take legal action in a civil case. a A person who owes a debt. for a ‘simple contract’. Most debts arise from simple contracts. If judgment has not been entered against you in a An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate., the time limit is six years. If a creditor does not bring court action against you within the relevant time limit, the Money that is owed by one person or business to another. becomes ‘A law made by parliament, either state or Commonwealth. Also called an Act, and Act of parliament or legislation. barred’ and you have a complete (1) A defendant’s response to the legal claims made against them in court by a prosecutor or plaintiff. (2) A lawful excuse for conduct: for example, causing minor injuries to someone while saving them from certain death. (3) ‘The defence’ is also a way of referring to the defendant and their legal team. to any court action brought against you.
Time under the LOA Act starts to run from:
- the date you should have made a payment;
- the date you last made a payment; or
- the date you or your representative acknowledged in writing that you owe the debt.
You should start with the most recent of these events and add six years. If the six years has expired, the debt is statute barred. While this does not mean that the creditor cannot ask you to pay the debt, it does mean that if the creditor seeks to sue you in court for payment, you A document that sets out what a person wants to happen to their money and other property after they die. have a complete defence.
Note that in Collection House Ltd v Taylor  VSC 49 a debt collector was held to have engaged in Behaviour that takes unfair advantage of a vulnerable person in a contract or other transaction. The vulnerability can be due to factors such as poor education, disability, language difficulties or being affected by alcohol. in breach of section 7 of the Fair Trading Act 1999 (Vic) (the current equivalent provision of which is section 20 of the Australian Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. Law) when pursuing a statute-barred debt (see Chapter 7.2: Consumer protection laws, for more information about unconscionable conduct). This entitled the debtor to be repaid $5000 that she had paid to the debt collector using her A debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now. card to settle the debt. At the time of accepting the $5000, the debt collector knew or at least suspected that the debtor was ignorant of the The period within which time court proceedings must be issued. This varies according to the type of case and requires legal advice. It is generally 15 years to recover land and 6 years for contracts and torts other than personal injuries (3 years if the injury was discoverable, and early notification requirements may apply, but a more generous long-stop limitation period may also apply)., impecunious and suffering from emotional difficulties. Collection House, one of Australia’s largest consumer debt collection agencies, later stated in a media A document signed by parties ending a court action. The party who began the action agrees to drop it, often in exchange for a payment by the other party. Also called terms of settlement. that it and its subsidiary Lion Finance would no longer pursue collection of statute-barred debts.
If your debt is statute barred, it is recommended that you write to the creditor and request that they stop contacting you for payment because the debt is statute barred. In any letter to the creditor on this basis, it is vital to include a sentence such as, ‘I deny that I am liable for the amount demanded’.
If judgment has been entered against you, the relevant time limit is 15 years, not six years, from the date of judgment. That is, after 15 years a creditor cannot bring a new action on a judgment (e.g. some When a debtor who cannot pay their debts has their money and property taken over and managed by a trustee who uses it to pay back creditors. The debtor is then called a bankrupt. proceedings), but can still commence proceedings enforcing that judgment (e.g. a A document issued by a court directing an officer to take certain action. May be a warrant of apprehension, directing that a person be arrested and brought before a court; a warrant of commitment, directing that a person be arrested and imprisoned; a warrant of distress, directing that a person’s goods be seized to satisfy a debt; or a warrant of seizure and sale of real estate. of seizure and sale), although in the latter case the court’s To agree to something being done, to approve an action or arrangement. See also informed consent. may be required before the creditor can take action (see Dennehy v Reasonable Endeavours Pty Ltd  FCAFC 158).
If you have given a A restriction attached to ownership of property to secure the repayment of money borrowed. The mortgage stops the owner of the property selling it until they have paid off the debt. for payment of the debt (e.g. over a house or a car), the relevant time limit is 15 years from the date of the end of the term of the mortgage. However, the LOA Act states that this time period only relates to the recovery of the principal lent by the creditor, not the interest. It is likely that action for interest on a mortgage must be brought within six years.