Dealing with debt collectors

The dos and don'ts of debt collecting

Debt collection is legal, but bullying and harassment by debt collectors is not. If you are intimidated by someone trying to recover a debt, there are things you can do to stop their threatening behaviour.

What debt collectors do

If you fall behind in loan or credit card repayments and don't contact your credit provider, a debt collector may contact you.

A debt collector could be a credit provider collecting the debt themselves or a debt collection agency acting on a company's behalf. Sometimes debts are sold and the buyer of the debts is the one doing the collecting.

When debt collectors can contact you

Debt collectors should only contact you when they are:

  • Making a demand for payment 
  • Making arrangements for repayment 
  • Finding out why an agreed repayment plan has not been met 
  • Reviewing a repayment plan after an agreed period of time 
  • Inspecting or recovering mortgaged goods (if they have a right to do so)

They are only allowed to phone or meet you face-to-face between 7:30am and 9pm on weekdays, and 9am to 9pm on weekends.

Debt collectors can only visit your home (or another agreed location) if there is no other way to make contact with you. If repayment arrangements can be worked out over the phone or by letter, there is no need for them to visit you in person.

Debt collectors should not:

  • Act in a way that is misleading or deceptive
  • Harass or force you into paying
  • Go to your workplace unless you ask them
  • Reveal information about your financial situation to others
  • Contact you by email, phone or letter more than three times a week
  • Contact you on national public holidays

If you believe you are being unnecessarily harassed by a debt collector, find out how to complain or write to your lender using our sample letter of complaint about debtor harassment.

Negotiating a repayment plan

Debt collectors will often agree to extend your repayment period (or allow you to make smaller repayments over a longer time) if you are having difficulty repaying your debt.

Sometimes they'll agree to finalise the whole debt if you make a lump sum payment of part of the debt. It's up to you to tell them what you are prepared to pay.

Be realistic about your living costs and other debts and be honest about your financial commitments. Use our budget planner to work out what you can afford to pay.

Budget planner

Don't give up if a creditor or debt collector rejects your repayment proposal. Put your situation in writing and tell them how much you can afford to pay and how often. Meanwhile, keep making payments at the level you can afford.

If you reach an agreement with the debt collector over the phone or in person: 

  • Ask for it to be confirmed in writing 
  • Confirm it in writing yourself in a letter to the debt collector 
  • Keep a copy of all letters you send

Then make every effort to keep to the agreement.

If a debt collector contacts you about a personal loan, credit card, or home loan for a residential property (whether it's your home or an 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.

Keep good personal records

To avoid disputes later, keep all:

  • Receipts
  • Records of payment
  • Letters you send or receive (include dates on all your letters)
  • Notes of telephone conversations or meetings - write down the time, date and who you spoke to (their name, their company or business, and their job title)

Photocopy original documents and send the copies to debt collectors. Store all your documents together to avoid losing any important information.

Disputing a debt

You have a right to dispute a debt if you think it is not yours. If you accept that you owe the debt but disagree with (or are unsure about) the amount claimed, ask for a statement of your account that sets out: 

  • The amount and date of the alleged debt 
  • How it is calculated 
  • Details of all payments made and all amounts owing (including principal, interest, fees and charges)

Read the statement carefully. It might include recovery fees or expenses charged by the debt collector. Check your original contract to see whether you have to pay these fees. Seek financial counselling or free legal advice if you think the fees or charges are unfair.

A debt collector should stop collection activity until your request for information has been met, and the debt has been confirmed. If they don't stop asking you to repay your debt during this time, find out how to complain or use our sample letter of complaint about debtor harassment to send to your lender. A default listing on your credit report should not be made during this period.

Debt collectors should give you 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.

In cases of mistaken identity, showing your driver's licence or other ID may resolve the situation. However, the decision to show ID is yours - you cannot be forced to do so by a debt collector. If you think someone is using your personal details to run up a debt in your name, contact your credit provider immediately. See identity fraud for more information.

What to do if the debt has been settled

If a debt collector contacts you about a debt that you have already paid in full, explain the situation in writing and include copies of any records or information you have that prove the debt has been settled. Ask the debt collector why they are contacting you. If they continue to contact you, find out how to complain.

Dealing with debt collectors can be stressful, but there are laws to prevent them from making your life a misery. If a debt collector calls on you, or if you receive notice that you are being taken to court, get free legal advice about your options as soon as possible.

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Last updated: 11 Feb 2014

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