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* Courtesy of ASIC Australia’s regulating body for Business via their Moneysmart.gov.au website
The Dos and Don'ts of debt collecting
If you fall behind on your loan, credit card or utility bills, you might be contacted by a debt collector. Here we explain how to deal with debt collectors, and what to do if you are being harassed or intimidated by someone trying to recover a debt.
What is a debt collector?
A debt collector can be a person from a credit or service provider or from a debt collection agency. A debt collector may contact you to:
If you have not responded to previous attempts to contact you, or not kept to an agreed repayment plan, a debt collector can contact you to find out why.
Important: Are you being taken to court?
If you receive notice that you are being taken to court (such as a summons, statement of claim or liquidated claim), get free legal advice immediately. Do not ignore the notice. If you don't take action, judgment may be entered against you. If that happens, the creditor may be able to enforce the judgment by repossessing your goods to sell and get their money back.
How and when debt collectors can contact you
Debt collectors can contact you by phone, letter, email, social media or by visiting you in person.
Keep good records of all communication with debt collectors. Include dates and times of contact, how they contacted you (e.g. by phone, in person), their name and company, and what was said.
Debt collectors must respect your right to privacy. By law, they cannot reveal that they are a debt collector or provide information about your financial situation to another person without your permission.
There are restrictions on the times debt collectors can contact you. For example, they should not contact you on national public holidays. Other restrictions include:
Phone: Debt collectors should not call you more than 3 times in a week (or 10 times in a month). Unless you agree otherwise, they can only call between 7.30am-9.00pm on weekdays, or 9.00am-9.00pm on weekends.
Face-to-face: They should not visit you in person if repayment arrangements can be worked out over the phone, by email or letter. However, if you do not respond to other attempts to contact you, they may visit you at home as a last option. They can only visit between 9.00am-9.00pm (weekdays and weekends), but no more often than once a month.
Social media and email: If a debt collector uses email, social media or similar technology to contact you about a debt, they must be reasonably sure that the account is not shared with another person and that their message cannot be viewed by anyone except you.
ASIC's Michael Saadat talks about debt collectors and your rights when dealing with them.
Unacceptable behaviour by debt collectors
It is against the law for debt collectors to behave in any of the following ways:
Debt collectors should not take advantage of you:
How to deal with a debt collector
If a debt collector contacts you, you should be cooperative but you have the right to be treated in a professional way.
You should also:
If a debt collector contacts you about a personal loan, credit card, or home loan for a residential property (your home or investment property), you may be able to apply to change your repayment plan on the basis of hardship, if a court judgement has not yet been made. See applying for a hardship variation for more details.
Be wary of credit repair
It might sound like a good idea to pay someone to help you fix your credit problems but credit repair agencies may not always be able to do what they claim. Be wary of 'credit repair', 'credit fix' or 'debt solution' companies that claim they can improve your credit report. In most cases, default listings and other historical information cannot be removed from your credit report unless they are proven to be wrong. Find out more about what credit repair companies can and can't do for you.
Call Money Buckets on 1800 825 010 to discuss when your credit file will automatically repair if Debts are Controlled
Read our booklet (Moneysmart.gov,au) Dealing-with-debt-collectors
Our Dealing with debt collectors booklet helps you understand:
Negotiating a repayment plan
If the debt is yours, but you will have difficulty repaying it, a debt collector may agree to extend your repayment period or allow you to make smaller repayments over a longer time. Be prepared to provide information about your financial situation to demonstrate what you can afford to pay.
Sometimes debt collectors will agree to finalise the whole debt if you make a lump sum payment of part of the debt. Only agree to pay an amount you can afford.
(Money Buckets Note: Most people find that they cannot handle this on their own. The Creditors are difficult to deal with, they are not experienced at Budgeting, they are not good negotiators. The whole process is too stressful and affects their Mental Health and their ability to continue to work. Especially as free services are often only available in work hours and have long wait times. This is where Money Buckets will step in, handle things at a time that is suitable to you and take over the payment arrangements and budgeting. We will also use part IX Debt agreements where possible to have as much legislative protection as possible on your agreement and Informal arrangements where this is not available or suitable)
Disputing a debt
Read any statements carefully as they might include recovery fees or expenses charged by the debt collector. Check your original contract to see if you have to pay these fees. Seek financial counselling if you think the fees are unfair.
If you think a debt is not yours or if you disagree with the amount owing, ask for your account information and copies of contracts. If the debt collector is acting on behalf of a creditor, they may refer your request to the creditor.
How to dispute a debt
If you want to dispute a debt because you do not owe it, you only owe part of it, or you think you have a good reason not to pay it:
Contact the lender, creditor or credit provider and tell them you dispute the debt
See if you can access a free external dispute resolution scheme. See how to complain.
Get free legal advice immediately
If you are contacted about a debt you have already fully repaid, explain the situation in writing to the debt collector and include copies of any records or information you have that prove the debt has been settled. If the debt collector continues to contact you, find out how to complain.
Disputing the amount
If you accept that you owe the debt but disagree with (or are unsure about) the amount claimed, ask for an itemised statement of your account that sets out:
The amount and date of the alleged debt
How it was calculated
Details of all payments made and all amounts owing (including principal, interest, fees and charges)
The debt collector should stop trying to collect any money until you have received this information.
A default listing on your credit report should not be made during this time.
Dealing with debt collectors can be stressful, but there are laws to prevent them from making your life a misery.
Ring 1800 825 010 Free Call to discuss any problems you may have
Customer Enquiries: 1800 825 010
Admin Office: 0243696287
Post: PO Box 6100, Kincumber, NSW, 2251
Money Buckets ™ is a Trademark of Starlight Home Loans T/as Fast Debt Help
ABN: 94 145 613 056
Credit Lic 388809
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Affiliates: Second Step Administration RDAA 1668
The Rite Place Pty Ltd trading as Debtrite