If you do not make repayments on a loan, credit card or fail to pay bills and invoices, you may hear from a debt collector. The role of debt collectors is to collect unpaid debts. Banks, other lending institutions or service providers may engage debt collectors. This article will explain what you need to know if a debt collector has contacted you.
What Can Debt Collectors Do?
If you owe a debt, then a debt collector may call you or send a legal letter to follow up on the debt’s payment. This letter is usually called a ‘letter of demand’ and is a formal letter demanding payment of the unpaid debt. The debt collector may also:
- offer to settle or make a payment plan;
- review a payment plan after an agreed period;
- ask why you have not met an agreed payment plan;
- advise what will happen if you do not pay the debt; or
- repossess goods you owe money on, as long as they have been through the correct process.
Debt collectors are also restricted in the times and ways they can contact you. In particular, if the debt collector is contacting you by phone, it can only be:
- between 7:30 am and 9:00 pm on weekdays;
- between 9:00 am and 9:00 pm on weekends; and
- not at all on national public holidays.
Debt collectors are not allowed to:
- trespass on your property;
- bully or abuse you;
- mislead or deceive you; or
- talk about your debt with other people without your permission.
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What Should You Do if You Are Contacted by a Debt Collector?
If a debt collector contacts you, you should ensure you are satisfied that the debt amount is:
- correct; and
- due and payable.
If you are not sure, you should seek legal advice.
If You Agree the Debt is Payable
Suppose you agree the debt is payable. In that case, you should be honest about your financial situation. Further, you should cooperate with the debt collector in relation to the repayment of the debt. If you can only repay the debt through a payment plan, you should advise the debt collector of your financial hardship and propose a payment plan.
The debt collector may agree to:
- a payment plan;
- reduce the debt if you pay part of the debt in a lump sum; or
- waive the debt (possible in circumstances where you receive a low income, have no major assets, and your situation is unlikely to change).
If You Wish to Dispute the Debt
Alternatively, if you want to dispute the debt, you could do so on the basis that:
- it is not your debt;
- you do not owe part of the debt;
- you have already repaid the debt;
- it has been more than six years (three years in the Northern Territory) since your last payment, and there is no court orders made against you concerning the debt; or
- you have grounds not to pay the debt (for example, a breach of your rights).
If you dispute the debt, you should advise the debt collector of your reasons as soon as possible. Additionally, you could ask the debt collector to provide you with details as to how the debt accrued, including a contract or agreement or a statement evidencing how the debt was calculated.
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It is possible that the debt collector may take you to court to try and recover the debt.
If you receive a notice about being taken to court, you should ask the debt collector for some time to seek legal advice and then obtain that legal advice straight away. If you do not, you could be subject to court orders against you, which could involve repossession of your goods or property.
Key Takeaways
If a debt collector has contacted you, there are a few steps that you can take. It is important that you understand the options available to you so that you can act accordingly. If you need help with understanding your rights and obligations regarding debt collectors, our experienced debt recovery lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A letter of demand is a formal letter demanding payment of the unpaid debt. It may be sent to you by a debt collector if you owe a debt.
You may be able to dispute the debt on the basis that it is not your debt or you do not owe part of the debt. Additionally, if you have already repaid the debt, it has been more than six years since your last payment or you have grounds not to pay the debt you may have grounds to dispute it.
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