How long can you chase a debt?
Jarrod Kemp • August 20, 2026
How long can you chase a debt?
Unpaid debts are a fact of life in business. But there is a limit on how long you can legally recover them — and it’s something that often gets overlooked until it’s too late.
So, how long do you actually have?
The short answer
In most cases (including Victoria), you’ve got 6 years to take legal action to recover a debt.
After that, the debt becomes what’s called “statute-barred.”
That doesn’t mean it disappears, but it does mean:
- you can’t enforce it through the courts, and
- your leverage to recover it drops significantly
It’s not always a straight 6 years
Here’s where it gets tricky.
The 6-year clock doesn’t just run and expire, it can reset.
If the debtor:
- makes a payment (even a small one), or
- acknowledges the debt in writing
the clock starts again from that date.
We see this a lot with older debtor balances that have had small, sporadic payments over time.
A few quick exceptions
Just to round things out:
- Court judgment? You may have up to 12–15 years to enforce it
- Secured debts (e.g. property)? Usually longer again
- ATO debts? Different rules entirely, they don’t follow the same 6-year limit
Practical tips for managing old debts
This is where it really matters for business owners.
If you’ve got older receivables sitting there, here are a few simple checks:
1. Know the age of your debts
Don’t just look at the balance, look at when it was last paid or acknowledged
That’s what determines your real timeframe.
2. Don’t leave recovery too long
If a debt is getting close to 6 years:
- consider escalating it earlier
- or making a call on whether it’s worth pursuing
Waiting too long can remove your legal options completely.
3. Be careful with partial payments
Even a small payment:
- can restart the 6-year clock
- which can work in your favour (or against you)
4. Clean up your books regularly
Old debts sitting on the balance sheet can:
- overstate your financial position
- create tax complications
Regular reviews help you decide whether to recover, write off, or formally deal with them.
The takeaway
As a rule of thumb:
- 6 years is your window for most debts
- but the timing isn’t always obvious
- and small actions can reset the clock
If you’ve got older debts sitting there and aren’t sure where they stand, it’s worth reviewing them sooner rather than later, a quick check now can save you losing the ability to recover them altogether.
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