Statute of limitations on debt in NSW — the 6-year rule explained

The 6-year rule — what it actually means

In NSW, the Limitation Act 1969 (NSW) sets a 6-year limitation period for most contract debts. This means that if you don't start court proceedings within 6 years of the debt becoming due, a court can refuse to hear your claim.

The key word is due. The clock doesn't start from when you invoiced — it starts from when the payment was supposed to arrive. If your invoice said "payment due within 30 days" and they never paid, the 6-year clock started on Day 31.

To be clear about what "statute-barred" means and doesn't mean:

What a time-barred debt means	What it doesn't mean
You cannot start a court claim to enforce the debt	The debt disappears or is forgiven
A court may dismiss your claim if raised as a defence	You cannot ask for payment informally
Your enforcement options through the legal system are closed	You cannot list it as a credit default (separate time limits apply)

When does the 6-year clock start?

For most commercial invoices, the clock starts from the payment due date — not the invoice date.

Examples:

• Invoice dated 1 January 2020, with "payment due 31 January 2020" → clock starts 1 February 2020 → limitation date is 1 February 2026
• Verbal agreement to pay by a certain date → clock starts the day after that date
• Ongoing retainer with monthly invoices → each unpaid invoice has its own 6-year clock from its own due date

When does the clock reset?

This is where many creditors — and many debtors — are surprised. The 6-year clock resets completely in two situations under the Limitation Act 1969:

1. Written acknowledgment of the debt

If the debtor acknowledges in writing that they owe the money, the limitation period restarts from the date of that acknowledgment. An email saying "I know I owe you $5,000, I'll sort it out next month" is enough. It doesn't have to be a formal letter.

This is why, if you're chasing an old debt, getting the debtor to respond in writing — even to negotiate — can extend your legal options significantly.

2. Part payment

If the debtor makes any payment toward the debt — even a token $50 on a $10,000 invoice — the 6-year clock resets from the date of that payment.

As the Financial Rights Legal Centre notes in its debt guide, creditors should document all acknowledgments and part payments carefully, as these can dramatically extend the enforceable period of a debt.

What types of debts does the 6-year rule apply to?

The 6-year limitation period applies to most contract debts in NSW, including:

• Unpaid commercial invoices (goods or services supplied)
• Unpaid rent (residential and commercial)
• Personal loans between individuals
• Dishonoured cheques
• Credit card debts (12 years in some interpretations — varies)

Different limits apply to:

• Judgement debts (debts where a court has already made an order) — 12 years in NSW
• Mortgage-secured debts — 12 years
• Some Commonwealth debts — may have different timeframes under federal law

What about other Australian states?

Each state has its own limitation legislation. The timeframes are similar but not identical:

State/Territory	Standard contract debt limit	Legislation
NSW	6 years	Limitation Act 1969 (NSW)
Victoria	6 years	Limitation of Actions Act 1958 (Vic)
Queensland	6 years	Limitation of Actions Act 1974 (Qld)
Western Australia	6 years	Limitation Act 2005 (WA)
South Australia	6 years	Limitation of Actions Act 1936 (SA)
ACT	6 years	Limitation Act 1985 (ACT)
Northern Territory	6 years	Limitation Act 1981 (NT)
Tasmania	6 years	Limitation Act 1974 (Tas)

Six years is the standard across Australia for simple contract debts. The differences lie in when the clock starts, when it pauses (minority, mental incapacity), and how acknowledgment is treated — which is why state-specific legal advice matters for complex situations.

Practical checklist — if you have an old debt in NSW

Can a debt collector still chase a time-barred debt?

Technically, a creditor (or a debt collector acting on their behalf) can still contact a debtor about a time-barred debt — asking for payment is not prohibited. But commencing court proceedings on a time-barred debt is not allowed, and threatening to do so when you know the debt is statute-barred may breach ASIC's debt collection guidance and the Australian Consumer Law.

ASIC's debt collection guidelines make clear that misleading debtors about their legal rights — including implying you can sue when you can't — is a compliance breach. See ASIC's enforcement outcomes at asic.gov.au/enforcement-outcomes for examples of penalties issued to debt collection firms that overstepped.

The bottom line

NSW's 6-year limitation period is a hard deadline for court enforcement. The good news: it's not as rigid as it sounds — acknowledgment and part payment reset the clock. The bad news: most business owners don't know the deadline is ticking until it's too late.

The fastest, cheapest way to protect your position: send a formal letter of demand now. At $29, it creates a paper record, signals seriousness, and may prompt a response that extends your enforcement window.

Sources

• Limitation Act 1969 (NSW) — legislation.nsw.gov.au
• Financial Rights Legal Centre — Debt fact sheets — financialrights.org.au
• ASIC — Debt collection enforcement outcomes — asic.gov.au/enforcement-outcomes