QLD Debt Collectors - Unsecured Personal Loan

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29 April 2015
Hi All,
I am currently dealing with a debt collection agency on behalf of my mother. The agency has purchased an unsecured personal loan from one of the big four banks and is currently seeking payment. The debt ended up in the debt collectors hands, basically because it was in arrears and my mother wasn't aware of the seriousness of the situation.

As I have not dealt with debt collectors before, it is a little scary, so i have been trying to find out what rights Mum has. As she doesn't personally have the money to pay the debt, the money is coming from a relative to settle the debt in full in a couple of weeks. The only other way I can see the collection agency getting the money is by forcing her to sell her house through the courts.

So I have a number of questions listed below which any comments would be appreciated:
a) What documentation should be requested from the collection agency to prove the debt? I know the debt exists, but just want to dot my i's and cross my t's. We have requested original loan documents, however have not yet received those.
b) Being an unsecured loan, I am certain that they would have purchased the debt from the bank at a much lower price the face value of the loan. This is probably a stupid question, but I assume that they have the right to collect the full amount of the bank loan and not just the amount that they purchased it for?
c) When it comes to agreeing the payout of the debt, what conditions should we put on the payment? One will be receiving the loan documents as requested per above.
d) I don't want the debt to be paid and then years later have someone else come chasing it as well. Is this something that needs to be removed from mum's credit record once the debt is paid?
e) If the matter were to go to the courts, what % of legal fees can be recovered by the agency? The debt is approx $40K. I read somewhere else that between 40% and 60% of legal fees are recoverable.
f) Bonus points - just our of curiosity, does anyone know what a collection agency would buy a debt like this for? I am thinking about requesting some sort of a discount on Mum's behalf.

I know its a long post, however would appreciate any feedback on any of the points above.

Thanks in advance.


Hi Scotty,

I will try to answer what I can:

(a) I would request the loan documents as well as the payment ledger - showing the payments interest and balance of the loan up until now.
(b) As far as I am aware, yes they are entitled to recover the full amount of the debt.
(c) You should make sure you have the loan documents and accounts ledger prior to agreeing to any payment. Then any payment should be agreed to be in full and final settlement of the debt. make sure you recieve confirmation then that the debt has been paid and cleared. KEEP THIS DOCUMENT!
(d) no. Just keep records of the settlement agreement (what you agree to pay to clear the debt) and confirmation of payment of that sum. This will be sufficient to ensure no one else can sue you for same debt in the future.
(e) Not sure about 40 - 60% it depends. Legal costs payable by an unsuccessful party are usually calculated based on a court scale of costs. For example you can only claim $x amount for drafting a claim and statement of claim, $x amount for discover etc. So its hard to say.
(f) No idea what they would have bought the debt for, but definitely try and negotiate a discounted amount. I'd say you only have access to half what they say is owing and absolutely no more. Then pretend to scrounge around and creep up as necessary.