Why You Need to Be Aware of the Statute of Limitations When Pursuing a Debt

Posted on: 13 February 2017


If you've been struggling with a large debt for a long time now and may be worried that you may not be able to get the debtor to pay, you may also have started to worry about the statute of limitations. What do you need to know as you go forward?

Unravelling the Options

There are a lot of individual rules governing whether or not a statute of limitation can be "claimed" by a debtor and whether or not the funds can actually be pursued. While the period of time varies between states and territories, you also have to bear in mind the actual date that the limitation period could start, whether it can be extended or not and, in fact, if the debt is even acknowledged.

What Do the Rules Say?

There is specific legislation in place that determines whether a debt has been acknowledged by the customer or not and as a consequence, whether the statute of limitations is even valid. Generally speaking, the customer (or an authorised representative acting for them) should have acknowledged that the debt is in existence and you need to have that type of acknowledgement in writing. The customer should be well aware that the debt is still outstanding and has not been paid.

When Does the Clock Start?

In this case, when does the statute of limitation period begin? Usually, it is when the debt becomes due and that can be either because an individual or contractual payment was not made or certain instalments have been defaulted upon, pursuant to the specific contract.

If the customer acknowledges the debt, then any limitation period can be subsequently extended, as can the period, should any payment be received on account. There are other circumstances in play here as well, but it's best to get specific legal advice in your case.


The statute of limitations for a simple contract can be as little as three years or more usually six. Meanwhile, a judgement debt has its own limit, which varies between 12 and 15 years.

After Expiration

When the limitation period has passed, you have very restricted options. In certain places, the debt is judged to be completely extinguished and you have no further recourse, while in other places, you may have options but they will be severely restricted.

Take Action Now

It's best to take action as soon as possible without letting the weeks and months accumulate. Have a word with a competent debt collection agency to go to work for you, while the clock is ticking.