Do I Have To Pay An Old Debt?

do-i-have-to-pay-an-old-debt

If you’ve recently been contacted about an old debt that you owe – or that someone such as a debt collector lender claims that you owe – there a few important facts that you should be aware of first.

These facts relate to the type of debt and how old the debt is, and in many cases if the debt is over six years old it may be “Statute Barred”, which means you are not legally obliged to pay the debt.

What Is A Statute Barred Debt

A debt may be “statute barred” if:

  • The debt is more than six years old
  • You have not made any repayments on the edbt in the last six years
  • You have not had legal action entered against you
  • You haven’t admitted in writing that you owe the debt in the last six years

There are certain cases though where the limitation of liability period is extended from 6 to 15 years. This would be the case when.

  • The debt is related to a mortgage over property, such as a car or a house
  • There is a court statement that states the debt is owed

In either case it is always recommended to seek professional advice when you are contacted about an old debt.

What Do I Do If A Debt Collector Or Lender Says I Have To Pay An Old Debt?

If you ae not sure if a debt is statute barred then you need to be careful when responding to a request for an old debt to be paid.

Until you have received proof that the debt is not statute barred or that a court order has been registered against you, you must ensure that you;

  • Do not make any payment towards the debt
  • Do not admit in writing that you owe the debt
  • Talk to professional about your situation
  • Request all relevant documents including the loan contract and account statements

**Important**

If you do make payment or acknowledge in writing that you owe the debt, the 6 year limitation of liability period will reset and your debt will no longer be statute barred.

A Debt Collector Called Claiming A Court Judgement Was Entered Against Me, What Do I Do?

In these can it is crucial that you ask for proof of the court judgement before doing anything else. Do not simply accept anyone’s claims about the debt.  If their claims are true you should have been issued court document confirming that a court judgement has been entered against you either by the lender themselves or a debt collection agency.

If it is true that the credit has started legal proceedings against you will be served with document called Form 5A or Complaint. When you receive the complaint you have 21 days in which to complete your defence on the 5A form and return to the magistrates court that served the papers.

You’ll also need to request all relevant documentation and proof of the debt from the debt collector or lender to ensure you can provide a complete and accurate defense.

It’s important to always seek your own professional advice instead of assuming what the lender or debt collector is telling you is true. And always keep records of any communication between you the lender or debt collector.

There are a number of organisations that can provide free advice related to debt matters:

Consumer Action Law Centre

Telephone: (03) 9629 6300,

or 1800 466 477 for country callers.

Email: advice@consumeraction.org.au

If you are deaf or have a hearing or speech impairment, you can  call through the National Relay Service (NRS):

TTY users can phone 133677 then ask for 1800 466 477

Speak & Listen (speech-to-speech) users can phone 1300 555 727 then ask for 1800 466 477

Internet relay users can connect to NRS on www.relayservice.com.au then ask for 1800 466 477

Credit Ombudsman Service

Tel: 1800 138 422

www.cosl.com.au

Financial Ombudsman Service

Tel: 1300 78 08 08

http://fos.org.au/centric/home_page.jsp

Moneyhelp

Telephone: 1800 007 007

www.moneyhelp.org.au

Written by Richard Thompson

Richard Thompson is the Managing Director and owner of JMA Credit Control and has over 25 years’ of trusted experience. Richard has a wealth of knowledge in Credit Management and Debt Recovery ensuring client’s recovery bad debt quickly and cost effectively.

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