Frequently Asked Questions

• How long before a debt becomes uncollectible in Australia?

  For most unsecured debts in Australia, a creditor has a six-year window to commence legal proceedings and recover the amount owed.

  The six-year period typically begins from the date the debtor last made a payment or provided a written acknowledgment (in effect, an admission) of the debt.

  The time limit changes if a creditor has already secured a formal decision from the court (e.g. a judgment). In this scenario, the allowable time for debt recovery is determined by the specific legislation of the state or territory where the judgment was granted.

  Given these statutory time limits, prompt action is crucial for the efficient recovery of outstanding debts. While we prioritise settling debts through non-litigious means (e.g. without court action), if litigation becomes necessary, commencing proceedings as soon as possible is advisable due to the potential length of the judicial process.

• What acts govern debt collection in Australia?

  In Australia, debt collections activities are governed by the Competition and Consumer Act 2010 (Cth). 

  Enforcement and oversight of these activities are managed by the Australian Competition and Consumer Commission (ACCC). The ACCC sets out strict, mandatory code of conduct and guidelines that all debt collectors must follow.

• When should you engage a debt collector for an unpaid debt?

  You should engage a debt collector as soon as possible. Recovering outstanding debts can be time-consuming and challenging. Working with a debt collector reduces your workload, increases the likelihood of success, and can protect your relationship with a debtor.

• Can you recover bad debts?

  You can recover most types of secured and unsecured debts. Debt collection is governed by strict legislation, so it’s best to leave recovery to a professional team that understands the regulations.

  Professional debt collectors typically have a much higher success rate when compared to recovering debt on your own. We work with debtors to reach a solution that’s suitable for everyone. That may involve developing a new payment plan, reducing the total size of a debt, or encouraging debtors to avoid legal proceedings.

  This results in a greater success rate and it allows us to recover a larger proportion of your bad debts.

• Can I do debt settlement on my own?

  You can negotiate a debt settlement on your own. Working with a debt collection agency typically increases the amount of money you can recover from a debtor.

  Some companies develop inhouse policies that allow them to settle outstanding debts. This can be time-consuming and it typically requires substantial administrative support.

  If you’d like to develop processes for debt recovery and settlement, a debt consultancy can provide training that supports your business. Our consultants will discuss the legal obligations surrounding debt collection, develop processes and teach your team the techniques they need to manage outstanding balances.