If you fall behind on your loan, credit card or bills, a debt collector might try to contact you.

There are two capacities in which a debt collector might be acting;

  1. Where they are acting as an agent and performing collection activities for a credit provider or creditor
  2. Where the debt has been assigned (purchased) to the collection company, they now effectively have taken over the debt and collecting for themselves for the debt which they have purchased at a much lower cost than the debt itself. You must be sent a notice of assignment for this to be effective which is a letter that notifies you about the actual debt amount and who is the legal entity that it is now owed to.

A debt collector is a person or organisation who collects overdue debts. This could be for themselves, or for a lender (such as a bank), service provider or debt collection agency.

If you had an agreement with your credit provider or creditor then Debt collection is legal. If  you owe money to (your creditors) they have a legal right to get it back. But it’s not okay to harass or bully you or lie to you.

Credit Reporting Impact:

Debt collection companies may impact your credit report by listing credit defaults. If noticed, it can significantly affect your credit score. “We Fix Credit” specializes in removing such listings, aiding credit score improvement.

What debt collectors can do

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 restrictions on 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

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

What debt collectors can’t do

By law, debt collectors must not:

  • trespass on your property
  • use overbearing tactics or abusive language
  • 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

These protections also apply to your family and friends

If a debt collector’s behaviour is unacceptable

If a debt collector threatens you with violence or physical force, contact the police immediately. Often debt collectors will try to contact you by text message and telephone. If there is unreasonable harassment, advise them that you feel intimidated and harassed as it may be grounds for undue harassment. The ACCC has debt collection guidelines that they must follow.

Having trouble with debt?

People can get into debt for many reasons, including losing a job, divorce or separation, getting sick or having an accident. Whatever your situation, if you are struggling to repay your debts, don’t be embarrassed to get help.

When you sign the loan or credit contract you make a legal promise to pay back the money that you borrow or pay for the service you sign up for within the agreed time frames.

Here’s what you can do to get back on track:

  • Contact your credit provider – If you can’t keep up with payments, talk to your credit provider straight away and ask for the proof of the debt and a payment schedule of payments made. Be realistic about what you can pay and be honest about your situation. Remember to keep a record of these discussions.
  • Be careful about doing this because they can be tricky and try to get you into a payment plan for a debt that is old.
  • The statute of limitations is 6 years from the date of the last payment, so if you’re making small periodic payments it can also prolong the debt and restart that 6 year clock every time you make a payment.
  • Apply for a hardship variation – Tell your credit provider that you are experiencing financial hardship and why. We Fix Credit can give you advice or directly assist you on how to apply for a hardship variation.

You could offer a smaller lump sum to finalise the debt

The creditor or debt collector may accept a lump sum less than what you owe to finalise the debt. Each company will have their own policy and criteria about what they will accept – they may look at the gap between your offer and the actual debt, how old the debt is and what your financial situation is like. We Fix Credit can help negotiate a lump sum settlement.

If the debt collector agrees to your lump sum offer, get it in writing. Their acceptance letter should state the amount is in ‘full and final settlement of all monies owed’. You must pay the full amount by the due date. Keep copies of the agreement and your receipt in a safe place.

You could do nothing

If you cannot afford to repay the debt, and you have no property that could be sold or income at risk, and you don’t expect that situation to change long-term, you may choose to do nothing.

In NSW the creditor/debt collector usually has 6 years to start court action to collect a debt (or 12 years if it’s a deed or a mortgage). There are slightly different laws regarding the Statute of Limitations of a debt in each state, however most are similar.

But if they do start action in time, and get a NSW court judgement, they have another 12 years to enforce any court judgment they get against you (this can be extended in some cases). If your circumstances change and you get income or property during this time, you may have to pay the debt plus interest and court/legal costs. (Interest can add up to a large amount over many years.)

Before you decide to do nothing, it’s a good idea to talk to We Fix Credit to look at all your options. If your situation is long-term and you cannot pay anything, it may be possible to ask the lender or debt collector to release you from debt entirely (because there’s not much point them spending time and money to chase you if there’s nothing they can collect from you). There may be other negotiations or ways to try to reduce or settle the debt.

If there is a credit impairment (e.g. default) affecting your credit file associated with this debt, it’s not a good idea to just pay it as it’s likely that the default listing will be updated to paid and still remain on the credit file. There are credit repair options and credit fix solutions that We Fix Credit can discuss with you to remove the credit default listing effectively from all three credit bodies and assist you with repairing your credit score at the same time.

You can call or contact us anytime for a free no obligation assessment to further your opportunities for repairing your credit by removing these these bad debts.