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If you fall behind on your loan or credit card, a debt collector might contact you.
What is a debt collector
A debt collector is a person who collects overdue debts. You might be contacted by the lender, by a debt collection agency, by a lawyer, or by an organisation that has bought your debt.
There are rules that apply to debt collectors to ensure you are treated fairly and the debt collector does not harass, intimidate or mislead you.
You should know free support is available to help you. You can ask for free financial counselling help, free legal help and free personal help. See contact details for free help.
If you receive a notice about being taken to court, get free legal advice straight away. If you ignore it, you could risk a default judgment being made against you and the lender applying to the court to enforce they money order. Among other things this could result in your home or goods being repossessed and sold, your wages being garnisheed, or even an application to make you bankrupt.
Understand your rights
It’s important to know your rights! When a debt collector contacts you:
- you should be treated fairly and respectfully
- you can ask questions and request information about a debt if you are unsure, including asking for a copy of the contract
- you should tell them if you're unable to meet your obligations under your credit contract. You can request an arrangement with your lender to alter your repayments or set up a payment plan. When you ask for help, your lender must consider you for financial hardship assistance.
- understand your options before agreeing to a repayment plan, while keeping to any response deadlines
- if you have concerns about how your lender or debt collector is handling your debt or the debt collection process - you can make a complaint
- you can seek free help from a financial counsellor
Debt collection rules and guidelines
What debt collectors can do
There are rules that apply so debt collectors must respect your right to privacy. They can contact you to:
- ask for payment
- offer to settle or make a payment plan
- ask why you haven't met an agreed payment plan
- review a payment plan after an agreed period
- advise what will happen if you don't pay
- repossess goods you owe money on, as long as they've been through the correct process
There are also guidelines to inform how and when debt collectors can contact you:
By phone
- Monday to Friday, 7:30am to 9pm. Weekends 9am to 9pm
- no more than 3 times a week, or up to 10 times a month
- not on national public holidays
If they are contacting you at work, contact should be limited to your normal working hours if known, or 9am to 5pm on weekdays
Face to face
- only as a last option if you haven't responded to phone calls or other ways to contact you
- any day between 9am and 9pm
Email and social media
- only if they're reasonably sure you don't share your account and only you can see your messages
You can tell a debt collector how to contact you. For example, if you don’t want to receive phone calls, you can ask for communications:
- by email only
- through your authorised representative, like your financial counsellor
- through another suitable contact method
If you've asked to be contacted in a particular way, keep a record of your request.
What debt collectors can't do
By law, debt collectors must not:
- trespass on your property
- harass or contact you at unreasonable times or more than is needed
- mislead or deceive you
- take unfair advantage of you because of illness, disability, age, illiteracy, or lack of understanding of the law
- discuss your debt with someone else without your permission – although they may contact third parties if they can’t locate you and are seeking your contact details.
These protections also apply to your family.
If you have concerns about how your lender or debt collector is handling your debt or the debt collection process, you should first complain to the lender or debt collector. The Financial Rights Legal Centre has a letter template you can use.
If the behaviour doesn't stop, contact the Australian Financial Complaints Authority (AFCA) to make a complaint and get free, independent dispute resolution.
If a debt collector threatens you with violence or physical force, contact the police immediately.
What to do when contacted by a debt collector
Consider the debt owed
If you are contacted about a debt, make sure you know what the debt relates to. If you're unsure about a debt, ask for more information. You can ask for documents or information on:
- who owns the debt
- how much is owed
- how the debt was calculated
- copies of contracts, statements or other records
If you're still unsure if the debt is yours, you can dispute (disagree with) a debt if:
- it isn’t your debt
- you don't owe all, or part of it
- with an unsecured debt, it's more than 6 years (3 years in the Northern Territory) since your last payment or acknowledgment of the debt, and there's no court judgment against you.
You should contact the debt collector and tell them why you're disputing the debt.
If your debt has been sold to another company, you can still ask for information about the debt.
Be honest and cooperative
Be honest about your financial situation, including other debts.
- Reply in good time to calls or letters.
- If the debt is yours and you agree with the amount being claimed, agree to a payment plan if you can afford it. Tell the debt collector if you can’t afford a repayment plan.
- Tell the debt collector if your contact details change.
Keep good records
Keep copies of all correspondence to and from the debt collector. Include:
- date and time of contact
- the name of the debt collector and company they work for
- how they contacted you (in person, by phone, letter, email or text)
- who said what
Propose an affordable payment plan
If you can afford to make payments, contact the debt collector and tell them you want to work out a payment plan.
If you can’t afford the repayments suggested, you should tell the debt collector that.
They may ask for financial details to show how much you can afford to pay. Only offer an amount you will be able to stick to.
The debt collector may agree to:
- let you pay back smaller amounts over a longer time
- close the debt if you pay part of the debt in a lump sum
- Pause your repayments for a time
- waive the debt, if you're on a low income, have no major assets, and your situation is unlikely to change
If they reject your request, you can make a complaint.
If you're threatened with legal action
Ask the debt collector to delay legal action to give you time to get legal advice and get legal advice as quickly as you can.
Some people have personal circumstances that can make dealing with debt collection more difficult. This may include family or domestic violence, homelessness, serious illness or mental health challenges.
You do not have to share personal information with a debt collector. However, if you choose to tell them about circumstances affecting you, it may help them understand your situation and communicate with you more appropriately.
Get free help to manage the situation
Get free financial help
You can get information and assistance from a financial counsellor on dealing with debt collectors, or if you need help to work out a repayment plan.
Call the National Debt Helpline on 1800 007 007 to talk to a financial counsellor. Monday to Friday, 9:30am to 4:30pm. Or live chat, Monday to Friday, 9:00am to 8:00pm.
Aboriginal and Torres Strait Islander peoples can call the free Mob Strong Debt Help on 1800 808 488. Monday to Friday, 9:30am to 4:30pm.
Get free legal help
Community legal centres and Legal Aid agencies offer free legal advice and can help you with disputes and debt recovery through the courts.
Get free personal help
Managing debt collection is a stressful experience that can take a toll on your emotional wellbeing. If you need someone to talk to (24 hours a day, 7 days a week) contact:
Lifeline – 13 11 14 or the online Crisis Support Chat
Beyond Blue – 1300 22 4636 or Beyond Blue website
If you're in crisis and struggling to pay for essentials, there are services to help you with food, bills and housing. See urgent help with money.