There are all sorts of reasons why you might find yourself struggling to cope with debt. You may have lost your job, gone through a divorce, spent more than you could afford or simply not know how to manage your repayments efficiently. Whatever the case may be, if you fall behind on your credit card repayments then you might be contacted by a debt collector. This can be an intimidating and even downright scary situation, so it’s important to know your rights when dealing with credit card debt collectors.
What is a debt collector?
A debt collector is a person who collects debts on behalf of a creditor. This could be someone from your credit card provider, or it could be someone from a debt collection agency.
A debt collector may contact you for several reasons, such as to demand payment for a debt, to explain the consequences of failing to pay a debt, or to help you make alternative payment arrangements to settle your debt.
How do I deal with credit card debt collectors?
If you are contacted by a debt collector about a legitimate debt, the most important thing you can do is cooperate. Be upfront and honest about your financial circumstances, including any other debts you may be struggling with, and answer any questions the collector may have.
Promptly respond to any correspondence from a debt collector and always return missed calls rather than trying to dodge their attempts to make contact. If you move house or your contact details change, let the debt collector know.
And finally, if a collector offers you an alternative payment arrangement that you can realistically afford, accept it – doing so can help you get your finances back on track.
Of course, the debt collector should also treat you in a fair and professional manner. Under Australian Consumer Law, there are a number of important protections in place to ensure that debt collectors do not behave inappropriately or unconscionably towards you.
Rates last updated May 31st, 2020
What are my rights when dealing with a debt collector?
Debt collectors are only allowed to contact you when necessary and when they have a reasonable purpose for doing so. A reasonable purpose for a debt collector to contact you could be to:
Provide information about your credit card account and the money you owe
Demand payment from you
Explain the legal consequences of failing to pay off your debt
Offer to settle your debt
Help you make alternative payment arrangements, or to review an existing payment arrangement
Inspect or recover mortgaged goods
Ascertain why you have not responded to previous attempts to contact you
Find out why you have failed to adhere to a repayment plan
How and when can debt collectors contact me?
There are several methods a debt collector may use to get in touch with you, but they must consider your circumstances and adhere to any reasonable requests you have about how and when you can be contacted.
Debt collectors can get in touch by visiting you in person or by contacting you via phone, email, letter or social media. However, they are obliged to respect your right to privacy and must not provide details about your financial situation. They also cannot reveal that they are a debt collector to someone else without first obtaining your permission.
Specific rules and regulations also apply to some contact methods:
If a debt collector contacts you via email or social media, they must be reasonably sure that you don’t share your account with someone else and that their message cannot be viewed by someone other than you.
If there is an easier way that a debt collector can feasibly contact you, such as working out an alternative payment arrangement over the phone or by email, there is no requirement for them to meet you face to face. However, in situations where face-to-face contact is necessary, such as if you have failed to respond to other efforts to get in touch, they should visit you at home during the hours outlined in the table below – visiting you at work is a last resort.
Know your rights
When dealing with credit card debt collectors, it's important to know your rights. If a debt collector visits you in person they must:
Not visit on a national public holiday
Leave immediately when asked
Not imply that anyone else (for example one of your family members) is responsible for the debt when this is not the case
Not talk to your child under 18 years of age about the debt
Treat you and your family with respect and courtesy
Respect your right to privacy when dealing with you in front of anyone else
Not engage in any sort of behaviour that suggests your home may be under surveillance
Not cause embarrassment or distress to you or anyone else
The table below outlines when and how often a debt collector can contact you:
Face to face
A maximum of 3 times per week or 10 times per month
A maximum of once a month
When is contact allowed?
Weekdays between 7:30am and 9pm, weekends between 9am and 9pm
Weekends and weekdays between 9am and 9pm (only if there is no other way to contact you)
What are debt collectors not allowed to do?
Under Australian Consumer Law, there are strict rules governing how debt collectors can act in their dealings with you. It is against the law for debt collectors to:
Use physical force, coercion or intimidation
Trespass on your property when asked to leave
Harass or verbally abuse you
Make false or misleading statements or engage in deceptive conduct
Take advantage of you if you are ill, disabled, unfamiliar with the law or vulnerable for some other reason
These laws not only apply to a debt collector’s treatment of you, but also to their dealings with your spouse, partner, family members and anyone else connected with you.
If a debt collector breaches any of the above conditions, you can make a formal complaint in writing to your creditor.
Tips to make sure you’re protected
The following tips can help reduce stress and ensure that you are treated fairly when dealing with debt collectors:
Keep records. Keep detailed records of all the communication you have with a debt collector. This will come in handy if you need to make a complaint.
Know your rights. Closely read the information in this article concerning your rights and the regulations around how a debt collector must treat you. This way you’ll be ready to take action if a debt collector acts inappropriately.
Know how to complain. If you’d like to complain to a creditor about the way you have been treated by a debt collector, a sample letter of complaint is available from the Australian Securities and Investment Commission’s (ASIC) MoneySmart website.
Hardship variation. If a debt collector contacts you about your credit card debt, you may be able to apply for a hardship variation to change your payment plan.
How can I dispute a debt?
If a debt has been incorrectly attributed to you or if the amount owing is wrong, request a copy of your account information and your credit contract from the debt collector.
In the case that you don’t owe the debt, you only owe some of the debt or if there is a good reason you should not have to pay the debt, you can dispute it by contacting the credit card provider. If you’re unhappy with their response you can complain to a free external dispute resolution scheme such as the Financial Ombudsman Service, while you should also consider accessing free legal advice.
Where can I get help?
If you’re struggling with debt, talk to a free financial counsellor. Financial counsellors offer independent advice on how you can manage debt and take charge of your finances, and they can also negotiate with creditors on your behalf. Contact the National Debt Helpline (1800 007 007) to find a counsellor near you.
If you need legal help, community legal centres and Legal Aid agencies across Australia can provide free legal advice. You can access details of community legal centres across Australia by phoning the National Association of Community Legal Centres on 02 9264 9595 or visiting naclc.org.au. Alternatively, contact Legal Aid in your state or territory.
Have more questions about how to deal with credit card debt collectors?
Once 60 days have passed with no payment towards your credit card debt, the account is considered "in default" and your card issuer can choose whether or not to begin the debt collection process.
Credit defaults are listed in your credit file for five years, or seven years if the debt collector is unable to contact you.
You can explain the situation in writing and provide any documents that prove you have settled the debt. If the collector continues to contact you, you can make a complaint.
Showing your driver's licence or another form of ID can clear up cases of mistaken identity, but remember that a debt collector has no right to force you to show ID.
Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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