Each Australian state and territory has legislation that limits the time within which a creditor can bring legal proceedings to recover a debt. This is called the limitation period. Once the period expires, the creditor's right to sue is extinguished — though the debt itself still exists.
Limitation periods for simple contract debts
For ordinary unpaid invoices and commercial contracts, the limitation period in each of the states where Merion operates is:
- Queensland: 6 years — Limitation of Actions Act 1974 (Qld), s 10
- New South Wales: 6 years — Limitation Act 1969 (NSW), s 14
- Victoria: 6 years — Limitation of Actions Act 1958 (Vic), s 5
- Australian Capital Territory: 6 years — Limitation Act 1985 (ACT), s 11
When does the clock start?
The limitation period generally starts from the date the debt became due and payable — for example, the due date on an invoice, or the date a formal demand was first made. The exact start date can depend on the contract terms.
What restarts the clock?
The limitation period can be restarted (or "acknowledged") by:
- A written acknowledgment of the debt signed by the debtor
- A part payment made by the debtor
Even a small payment or an email saying "I know I owe this, I'll pay when I can" may restart the limitation period from the date of that acknowledgment. This is an important consideration before you communicate about an old debt.
Judgment debts have longer limitation periods
If a creditor has already obtained a court judgment, the limitation period for enforcing that judgment is generally 12 years in Queensland, New South Wales, Victoria and the ACT. A judgment debt is therefore a more serious and longer-lasting obligation than an ordinary unpaid invoice.
A statute-barred debt still exists
Even after a limitation period has expired, the debt itself does not disappear — the creditor simply loses the right to sue. A creditor can still request payment voluntarily, and you may still choose to pay. However, a creditor must not mislead you about their legal rights — if a debt is statute-barred, they cannot tell you that legal action will definitely follow.
Get independent advice
If you believe a debt may be statute-barred, or if you are unsure about your position, contact the National Debt Helpline for free, confidential advice on 1800 007 007.
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