Debt collectors
Information about dealing with debt collectors
Debt collection is a legitimate business activity involving recovering payment from consumers for outstanding debts they are legally obliged to pay. A debt collector is a person who, on behalf of another person, collects or requests payment of debts. The conduct of debt collectors is governed by the Consumer Credit Code and a number of other Commonwealth and State laws, and all debt collectors must be licensed under the Debt Collectors Licensing Act 1964.
If a debt collector contacts you, don't panic. Listen to what they have to say and be cooperative and honest. If they intimidate you, behave in a violent manner, contact you repeatedly or engage in similar unprofessional conduct, you can fill out a Consumer Complaint Form and either post or fax it through to our Compliance Team. Be aware that your liability for the debt will not be affected no matter the inappropriateness of the debt collector's behaviour.
For more details on what constitutes improper conduct on the part of a debt collector and when and where a debt collector can contact you, refer to Debt Collector Behaviour and Making contact with the debtor respectively.
If you are approached by a debt collector about a debt you are unaware of, a debt that has already been finalised or a debt where the total amount owing seems too much, you are within your rights to dispute this with the debt collector or the creditor.
If you are unable to resolve the dispute, or if you have a complaint about a debt collector, you may be able to resolve it by referring it to an independent body, but you must act as quickly as possible to avoid the case proceeding to court. For more information, see complaints and disputes.
When you believe that the debt is not yours
Ask to see evidence that proves that you are liable for the debt. A debt collector must stop debt collection activities until it has been determined who is responsible to pay the debt. While the debt is being disputed, the debt collector is not authorised to attach a 'default listing' to your credit report. If the debt collector has mixed you up with someone else, simply showing your passport or driver's licence should sort out the problem.
If you are certain that the debt is not yours and showing identification doesn't resolve the situation, then you may be the subject of credit fraud (or "identity fraud"). Credit fraud occurs when someone accesses your personal details and uses them for their financial benefit, incurring a debt in your name. If you believe this has happened, tell your creditor immediately, obtain a copy of your credit file and check whether it has any default listings which are not your doing, and contact the police if you are able to confirm that fraud has occurred.
When the debt has already been paid
If you feel that you no longer owe the money in question, write to the debt collector setting out the reasons why you believe that the debt has already been paid, attaching any documents or other evidence you may have which support your case.
When you acknowledge that you owe the debt but not the amount
You need to request an itemised statement of your account which lists:
- the current amount and the date the debt reached this amount;
- how this figure was determined; and
- the total amount paid and total amount owing comprising principal, interest and fees and charges.
Check this information against your own records and advise the debt collector of any payments which they may be unaware.
Also, check whether debt collector recovery fees have been added to the debt. If this is the case, verify whether you are obliged to pay these and obtain legal advice if you wish to object to paying them. Generally, a collector's costs are not able to be recovered from you unless there is a contractual agreement between the creditor and you in which it provides that you are liable for debt collection and/or recovery costs. Where the contractual agreement provides for such costs to be recovered, they are payable to the creditor who then pays the debt collector. Debt collector recovery costs must be reasonable and can be disputed by you before the Courts.
Case study: Debt Collector fined for unlawful fee.
Old 'statute-barred' debts
If a debt collector contacts you about an old debt, you may have a defence (legal grounds that prohibit a debt being enforced in court) if:
- at least six years have passed since you last made a payment towards the debt or confirmed that the debt is yours; and
- no legal proceedings have been initiated to recover the debt during this period.
You should get independent legal advice before you have any further contact with the debt collector, because as soon as you make another payment or confirm the debt, this defence will no longer be valid.