Do you know that the Statute of Limitations NSW erases some of your 6 year old debts? And, there are also 12-year old debts that you are not obliged to pay anymore! But, if you don’t know about this provision of the law, the creditor may still demand payment from you. Read on and learn how you can improve your credit score and escape debts legally.
What are Statute-barred debts?
It refers to the amount of money you owe which the creditor can no longer collect from you, because the period of a statutory limitation has already expired.
In NSW, the limitation period for credit card debts, unsecured personal loans, debts referred to debt collection agencies and other similar simple contracts is 6 years. The period starts form the date the debt becomes due. For debts following a court judgment, the statute of limitation is 12 years.
Can the creditor re-start the limitation period legally?
Yes! If you owe a 6-year old credit card debt, or a 12-year old court judgment debt, but you do any of the following actions, the limitation period will be re-started:
- You repay the debt, whether in full or in part
- You acknowledge the debt in writing
What to do if your debt is statute barred
- Send a letter to the creditor that your old debt is barred by statute of limitations NSW. If they are still sending demand letters, or of a debt collector is adamant at collecting payment, inform them that they are no longer allowed by law to collect payment from you. But, be careful when writing a letter. Since some creditors may interpret it as an act of acknowledgement of debt. So, if you are not sure what to write, then you can proceed to option number 2.
- Ignore the letters demanding for payment. In NSW, when the statute of limitation ends, the cause of action also expires. That means, the debt is totally extinguished and so is the right to file a case against you on the same subject matter. But, it is still advisable to seek professional help to ensure that your debt was really extinguished by law. Otherwise, the creditor can file a case against you and may win a court judgement for your debt.
- Never admit that you still owe the debt, in writing, if you know that the debt was statute barred.
- Don’t pay it. The moment you make a payment, you are acknowledging that the debt still exists.
- When your creditor claims that you still owe them a sum of money, always request for the details of the alleged debt and seek professional advice right away.
- Request for a copy of your credit report. If the debts barred by the statute of limitations still appear, file a dispute with the credit bureau and have it removed. Removal of negative entries such as unpaid debts may improve your credit score by a few hundred points.
How can I remove Judgement Debts from my Credit Report?
There are many ways to have the judgement debts deleted from your credit file. The easiest way is to file a dispute for judgments which have already been barred by the statute of limitations.
But, if it is not yet barred by law, you can do any of the following:
- Ask the creditor to sign a consent order or notice of discontinuance.
- Convince your creditor to formally discontinue his/her action, upon payment of the debt. If you have not yet settled the debt, you can also execute a promissory note or submit documents that will ensure the satisfaction of the amount of money you owe.
- Most plaintiffs (creditors) will not agree to discontinue the action– if the judgement is still unpaid—but many creditors agree to the prospect of being paid in full. So, there is no harm in trying your luck this time.
- Once signed, the court will release a stamped order which you can submit to the credit reporting bureaus; which in turn, will delete the listing from your credit report.
It is important to note that there are many intricacies involved in claiming for the coverage of the Statue of Limitations. While, in general, debts from simple contracts are covered by the law on statute barred debts in NSW, the terms of credit may vary as well as the period in which the limitation starts. So, it is still advisable to seek legal help whenever you feel that there is more to the actions of debt collection.
But, if you’re simply planning to improve your credit score, by removing the negative listings which includes statue barred debts which should no longer appear on your credit file—DIY Clean Credit Repair Kit can help you out. Make an enquiry today!