All of us have been in a situation at one point or another where we owe someone money. Whether it’s paying someone back for dinner or obtaining a loan from a multinational financial institution, the burden of debt can be crippling for individuals and businesses alike.
If you are in debt, you have a legal responsibility to repay the money you owe. In the event of default, the creditor will almost always have legal recourse to obtain their money. The relevant jurisdiction for the dispute depends on the size of the debt. As a general rule in NSW, the following courts have jurisdiction over debts of the following amounts:
- Local Court Small Claims Division - $0 – $20,000
- Local Court General Claims Division – $20,001 – $100,000
- District Court of NSW - $100,001 – $750,000
- Supreme Court of NSW - $750,001 +
While you have a legal responsibility to repay any monies owed, you also have statutory protections under the Australian Consumer Law. Creditors and debt collectors cannot use physical force or coercion and cannot harass, mislead, deceive or take advantage of you in recouping the debt. They also should only contact you when it is necessary and for a reasonable purpose (such as making a demand or arrangements for payment). By way of example, something unnecessary or unreasonable would be repetitive calls at 1:00am demanding immediate repayment of the debt.
Further, the Limitation Act 1969 (NSW) stipulates the limitation period for simple debts such as credit cards, unsecured personal loans and simple contracts is 6 years. This period starts from the date the debt becomes due. Therefore, if you owe a debt that is over 6 years old, it is possible the creditor is statute-barred from suing you for repayment.
Recently, we acted for a client who was a business owner and owed over $35,000 to a government agency. The government agency was threatening to sue our client for debts up to 12 years old, some of which our client had no knowledge or control over. After systematically reviewing the debts purportedly owed by our client and eliminating those outside the limitation period and our client’s knowledge or control, we settled the debt for less than half the amount originally asserted by the creditor. Our client was able to move forward debt-free and with confidence in his business.
If someone is pursuing you for a debt, it is important for you to obtain the right advice tailored to your situation. Our litigation team at Frank Law is available to assist you in your debt negotiation, offering tailored advice and solutions to your situation.
If you have further questions, please contact Matthew Sibley at msibley@franklaw.com.au.
This is not legal advice.
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