Collection of Old Debts
If a collector demands payment of an old debt (ie. Over 6 years since the last payment was made):
| 1. Write to the collection agent stating that any legal action to recover the debt would be defended under the Statute of Limitations as the last payment was more than six years ago and you are unaware of any court judgment. |
| 2. Ask the collector to produce a copy of the judgment if they wish to pursue their claim. |
| 3. Ask that all future correspondence be in writing if a judgment exists and if a judgment does not exist to please stop contacting you. |
| 4. Threaten to make a complaint to the appropriate regulator (ACCC if it is a general debt; the Australian Securities and Investment Commission for credit and insurance matters; or Office of Fair Trading generally) or the police for harassment if: |
| (a) they continue contact where no judgment exists and the last payment was more than six years ago. |
| (b) if the judgment exists and they fail to contact you using the specified mode of preferred contact. |
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If you make a payment now on an old debt you reactivate your debt (liability). Some debt collectors suggest they'll take a small payment in lieu of the whole debt and then once you've paid, put you up for the full amount.
Being taken to court
Most creditors only take people to court as a last resort. If you talk to your creditors, work out an action plan and then make the payments you have offered, you are unlikely to face court.
But, if you do get a summons to appear in court:
| Don't panic - You will be treated fairly |
| Fill in the forms and return them as quickly as possible to the court or creditor, as instructed. Get help if you need it (see 'Useful Contacts') |
| If you think your credit charges are too high, the court might re-open your original agreement |
| If you are going to the Small Claims Tribunal, you can have a 'lay representative' to speak for you, that is someone who isn't a lawyer |
| You might be able to get Legal Aid and be represented in court. (See 'Legal Aid' for the office in your State or Territory. See our "Contacts" Page) |
If the court orders you to pay back a certain amount, you must do so.
The court process - How do you know when the service provider has commenced legal action?
You will know you are being taken to court if you receive a 'Claim and Statement of Claim' for amounts under $50,000 or a 'Minor Debt Claim' (for under $7,500).
What to do next
If you have received either a 'Claim and Statement of Claim' or a 'Minor Debt Claim', you usually only have 28 days to respond from the date you receive it (NOT 28 days from the date on the document). The Claims will tell you how long you have to respond.
A 'Claim and Statement of Claim' and a 'Minor Debt Claim' are important documents. Do not ignore them - seek legal advice immediately. Lodge a defence to the debt explaining why you do not believe you owe the money.
| You should seek advice before you do this. The defence must be lodged with the court before the time given to respond expires. |
| If you receive a 'Claim and Statement of Claim' respond with the forms called 'Notice of Intention to Defend' and 'Defence'. |
| If you receive a 'Minor Debt Claim' you will need to file and service a 'Notice of Intent to Defend and Defence' form. |
If you do nothing, the court will make orders that you owe the debt. Get legal advice quickly.
What can the court do to make me pay the money?
If the court makes orders that you do owe the money, it can do any of the following:
| Garnish your wages or bank account if you are working. This means they can take money from your bank account or out of your pay to cover your debt |
| They cannot take basic household items or a car that is worth less than $5,000 |
| Force you to become bankrupt |
| Examine you in court as to your assets and liabilities |
QUICK TIPS
If you are not sure what to do when dealing with harrassment from creditors, get advice from a financial counsellor or solicitor.
You can complain if you feel you are being harassed by a debt collector!
WARNING
Always get legal advice first before you pay: any money towards a very old debt (more than 6 years from when the last payment was due) or a debt which you do not believe you owe money.
OFT has a fact sheet on 'Managing credit - Harassment from creditors'.
The Australian Securities and Investments Commission (ASIC) has tips on how to deal with debt collectors, repossession and court proceedings.
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