Debt collectors make a business of getting debts paid. They take on pursuing payment (sometimes quite aggressively) from people who owe money.
Debt collectors must be licensed in Australia and there are certain laws that are in place to protect debtors (the people owing money) from extreme harassment or intimidation. These laws restrict debt collectors from engaging in specific activities to recover a debt.
If you are dealing with a debt collector, it is important for you to know your rights and what a debt collector is and isn’t allowed to do.
What debt collectors can do
Debt collectors have the right to contact you by various means including letter, email, phone, social media or by visiting you in person. However they must respect your privacy and there are some specific restrictions regarding the frequency and timing of phone calls and visits.
You should receive no more than 3 phone calls per week or 10 per month and calls must not be made outside the hours of 7:30am to 9pm weekdays and 9am to 9pm weekends.
In-person visits are usually employed as a last resort if you are unable to be contacted by other means. They should only be made between the hours of 9am to 9pm. You have the right to request that a debt collector not visit or call you at a certain location (i.e. at your place of work).
What debt collectors can’t do
It is unlawful for a debt collector to disclose any details of your personal financial situation or their identity as a debt collector to another person unless you allow them.
It is unlawful for debt collectors to harass you, use offensive language or conduct, use or threaten any kind of physical force on you or your property or trespass on your property. (This includes remaining on your property after you have asked them to leave.)
Debt collectors are prohibited from making any false, misleading or deceptive statements or engaging in misleading conduct.
It is also unlawful for them to take advantage of any disability you have by reason of an illness, your age, illiteracy or other circumstances.
How to complain about a debt collector’s conduct
If a debt collector is engaging in any of the above conduct you should contact the police to report the behaviour immediately. You can also make a formal complaint to the Financial Ombudsman Service.
Your options when contacted by a debt collector
The sooner you can settle the debt, the sooner you will be rid of the debt collector. As such, it is in your interests to be up front and communicate frequently with the debt collector so that you can work things out quickly.
When contacted about a debt, you can:
- Dispute the existence of the debt: This may be appropriate where you have already paid the debt or there is some reason why you are refusing to pay the money, (for example because the goods or services provided were defective or incomplete).
- Dispute the amount of the debt: This may be the case if you have already made a partial payment on the debt or there has been a typo.
- Negotiate a payment plan: You are entitled to negotiate a repayment strategy that is convenient for you. Don’t be pressured into agreeing to something that is too onerous or will cause you to default again.
- External Dispute Resolution: Make use of free dispute resolution services to resolve any dispute you have with a debt collector over the nature of the debt or a repayment schedule.
- Always keep good written records of all communications including letters and emails that are exchanged by you and the debt collector and the principal company to whom you owe money.
- Where arrangements are discussed verbally, request written confirmation and take your own personal notes to record what was discussed.
- Don’t hide from debt collectors, and be upfront with any issues you may have with making payments.