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The debt collection process

Find out how debt collection works, when you may be contacted and what you can do about it.

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If you’re behind on repayments for a loan, credit card or utility bill, a debt collector may get in contact with you about it. While dealing with an overdue debt can be overwhelming, it’s usually easier to manage when you understand the process. So if you’re worried about debt collectors contacting you, use this guide to learn more about what’s involved and the different options you have for dealing with your outstanding debts.

When will a debt collector contact me?

Every credit provider has a different policy when it comes to overdue debts and debt collection. But generally, if you’re late with a payment, you won’t hear from a debt collector straight away. Instead, your provider may contact you by phone, email or letter reminding you of the debt and requesting payment.

If you haven’t responded to your provider or made a payment, they may then refer the account to a debt collector. This could be the case if you have a payment that’s more than 30 days overdue. It’s even more likely that you’ll hear from a debt collector when your account is “in default”, which can happen if you haven’t made a payment for at least 60 days and owe at least $150.

When will a debt collector stop contacting me?

There are time limits for legal action to be taken, however, debt collection agencies can contact you for up to 6 years since your last payment date, or when you acknowledged in writing that you owed the debt. This means that the 6-year period is restarted every time you take either of those actions. If there is a court judgement, depending on the state, they are allowed to collect from you for up to 15 years.

How will debt collectors contact me?

The most common way for debt collectors to contact you is via phone, either on your given landline or mobile number. However, they can also contact you by letter, in-person or online through email or social media.

The government also has strict recommendations around how often a debt collector can contact you, which are outlined in a debt collection guideline booklet created by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC). We’ve summarised these recommendations in the table below:

Type of contactTimesContact recommendations
PhoneMonday to Friday: 7:30am to 9pm

Weekends: 9am to 9pm

You could be contacted up to 3 times per week or 10 times per month in total.
Other (letters, emails, social media etc)No specific hours listed.You could be contacted up to 3 times per week or 10 times per month in total.
Workplace contact9am to 5pm on weekdays or your normal work hours (if known)You could be contacted up to 3 times per week or 10 times per month in total.
In personWeekdays and weekends: 9am to 9pmDebt collectors should limit in-person contact to once per month and only when absolutely necessary.

Debt collectors are also advised to respect any reasonable requests you have for contact within specific hours, based on your circumstances. If you think a debt collector is contacting you too often, or not giving you an opportunity to respond, you can contact the company to complain or call the Credit and Investments Ombudsman on 1800 138 422 to submit a formal complaint.

Debt collectors and privacy

As well as recommendations around how often a debt collector can contact you, there are also regulations and requirements that help protect your right to privacy. For example, a debt collector is not allowed to give anyone else details about your financial situation or to reveal that they are a debt collector unless you give them permission to do so.

This means if a debt collector contacts you at home or work and you’re not there, they can’t tell anyone else about the situation. Similarly, if they contact you online, they have to be reasonably sure that no one else will see the information.

What can I do when debt collectors get involved?

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If a debt collector contacts you, it’s ideal to respond to them as soon as possible so that you can deal with the overdue account. Depending on your circumstances, you may be able to consider some of the following options:

  • Keep a record of the contact. Take note of when a debt collector has contacted you and what they said. This will help protect your right to privacy and may be used as evidence if you have to lodge a complaint.
  • Explain your situation. Let the debt collector know why you haven’t made a payment. If you’re experiencing financial hardship, they may be able to offer you a payment plan without taking further action.
  • Work out how much you can afford to pay. Debt collectors may suggest a repayment plan for you based on the amount that you owe. When that’s the case, make sure you can afford the repayments based on your current circumstances. If you can’t, suggest a repayment amount that would be reasonable for you or ask about other options.
  • Request a hardship variation. This is a formal request for a variation in the terms of your loan or account. For example, you could request smaller repayments over a longer period of time, postponement of payments for a fixed amount of time or a combination of both these options. You’ll need to submit your request in writing and the credit provider must respond within 21 days.
  • Get professional advice. If you’re unsure of how to deal with your debt, contact the National Debt Helpline on 1800 007 007 to speak to a financial counsellor for free.

What if I am contacted about a debt that's not right?

If a debt collector has contacted you about a debt that you don’t think is yours, or if the amount of debt seems wrong, ask for a copy of your account information and contract. Check these details against your own and then contact the provider to dispute the debt.

If necessary, provide copies of any additional details, such as payments you’ve made that aren’t recorded on your account. If the situation still isn’t resolved, you can get free legal advice through the National Association of Community Legal Centres (www.naclc.org.au).

Dealing with overdue debts can be overwhelming, but there are many ways to get back on track. So now that you know how the process works, you can take steps to deal with your repayments in a way that works for you.

Pictures: Shutterstock

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