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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22986
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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A friend of mine purchased a vehicle in Australia some years

Customer Question

Hi there
a friend of mine purchased a vehicle in Australia some years ago on finance, 4 years ago he tried to contact the finance company for a settlement figure by phone & email with no luck, since then he has had no contact from them what so ever until last week when he received an email stating that he now owes over $7000.00 to them in fees - are they able to do this after this length of time and no contact, no mail or phone calls from them to chase up the outstanding amount? As my friend was under the impression that the loan had all but been paid off
Your response would be greatly appreciated
Submitted: 1 year ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 1 year ago.

The limitation period for collecting a debt is six years. So even if the finance company was difficult to contact, the debt would remain enforceable for six years after the last payment, and the date of default for when the next payment was due, but which he would have missed. The time for claiming starts at the time of the missed payment. The problem with finance company loans is that they often have very high penalty interest, and so over the last four or so years, the interest would accumulate on a compound interest basis. This is why it has reached this amount. So unfortunately they are still able to enforce payment, and he may need to make arrangements to pay this off. He should check whether the finance company went out of business and whether this is being claimed by a debt collection company. It is possible to enforce a judgment from Australia in a New Zealand court, so they could get a judgment and then chase him here.