The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) are responsible for policing the behaviour and conduct of debt collectors in Australia.
Basically, a debt collector is anyone who rings you up or writes to you seeking payment of money you may owe them. Creditors can have their own ‘in-house’ debt collectors or they can contract the work out to a collection agency whose sole job it is to chase up bad debts.
ASIC and the ACCC have published guidelines for debt collectors as to what is and is not acceptable practice when pursuing debtors for monies owed.
1. A debt collector is not permitted to harass, intimidate, threaten, embarrass or attempt to ‘tire out’ a debtor. Further, they cannot swear or abuse you, use demeaning language, physical force or any form of coercion.
So how much is too much? The guidelines suggest that polite, professional and necessary contact (written or oral; phone calls, messages, emails, text messages and letters) of up to 3 times per week or 10 times per month is within acceptable limits.
If you feel that the language or conduct of a debt collector in his/her dealings with you offends this guideline you should tell the person this and advise that you will contact the ACCC and/or Fair Trading if they persist.
If the conduct is really menacing and out of hand you can go to the police and seek an Apprehended Violence Order (or the equivalent in your state) which requires the person not to contact you or come within a certain distance of you. If the police won’t pursue the matter for you, you can always go to your local courthouse and ask the registrar or court staff there to assist you in taking out your own order.
2. A debt collector may only make contact where it is reasonably necessary. There must be a purpose for the call or letter and it can’t be just to ‘strong arm’ or intimidate you.
3. A debt collector is allowed to come to your home if it is reasonably necessary to do so (for example to repossess something). However, should you ask them to leave your premises, they must do so immediately (to stay is trespass). The guidelines require them to leave the vicinity of your home. They can’t, for example, stand across the road and watch, giving you the impression that you’re under surveillance.
If they won’t leave or seem to be stalking you, report them to Fair Trading or call the police. Keep written notes of any incident noting time, place, date, names and who said what.
4. If you advise a debt collector that you have a representative handling the matter on your behalf and you give them that person’s details (eg a solicitor or financial counsellor etc), the debt collector must not contact you personally anymore and must only deal with your authorised representative.
5. A debt collector must always provide you with any documentary evidence in relation to the debt that you may require. For example, the breakdown of interest or the default charges.
If they will not provide further information about your account upon request then it could be construed as misleading and deceptive conduct. Make sure you put your request in writing and document the details of all conversations about the matter so that you have your facts right when you make a complaint.
6. Once enforcement proceedings have been commenced by a creditor, all approaches from debt collectors must cease. If your matter is before the courts and the debt collector is still making unnecessary contact, you should report the matter to Fair Trading.
7. A debt collector must not tell a debtor that they (the creditor) do not enter into hardship arrangements or negotiate repayment plans. This would be misleading and deceptive conduct. Most lenders/creditors will be obliged under the provisions of the Uniform Consumer Credit Code or the Code of Banking Practice to entertain a variation of your loan contract in circumstances of hardship.
8. It is unacceptable for a debt collector to encourage a debtor to get into more debt to service their liability to that creditor. If a debt collector says to you words to the effect: ” Can you get another credit card and pay out this one?” or “Can you refinance your home to draw out some equity?” you should take notes and make a complaint to the ACCC or the Fair Trading body in your state.
9. If you have entered into a repayment plan with your lender, its debt collectors must stop contacting you whilst you are honouring your obligations under that arrangement.
Similarly, under the relevant guidelines, if you become bankrupt or enter into a formal arrangement with your creditors under Part IX of the Bankruptcy Act, all debt collectors are obliged to cease contacting you.
10. A debt collector must not misrepresent the situation to you. This includes:
a) Advising you of your rights, or lack thereof incorrectly eg. “because this is an investment property you cannot vary your loan contract”;
b) Representing to you a course of conduct the creditor can and will adopt when this is not the case “We will be getting a judge to sign judgment against you tomorrow” or “don’t worry it will be at least two months before anything happens if at all”;
c) Advising you that your creditor will do, or refrain from doing something when this is not the case eg “We will note a default on your credit file”;
d) Misrepresenting the law to you eg “If you don’t pay by Friday we will take your house next week.”
Of course, this summary of the guidelines only relates to legitimate debts. If you dispute the debt or allege you don’t owe it at all, you should advise the debt collector of this and say that all actions, legal or otherwise will be rigorously defended. They are not allowed to contact or pursue you for a debt you have advised them you dispute, except to clarify an issue or advise you that they will be adopting a certain course (eg “We know you dispute this amount but here is a copy of your January statement and if you persist in denying that the debt is owed, we will be commencing Court proceedings without further notice to you.”)
So, just because someone is insistent and inflexible and they act for a lender does not mean that they can steamroll you. They are bound by certain rules and guidelines and you have the power to report them which can carry onerous penalties for them.