A debt collector is after me

A call or a letter from a debt collector can feel like an alarm going off. It helps to know they are working to rules, and that you have more room than they usually say. This guide is general information. Nobody here is a debt collector, which makes us only slightly more fun at parties.

What this usually means

A debt collector is either a company the creditor has hired to chase the money, or a company that bought the debt. The creditor might be a bank, a phone company, a utility or a shop.

Debt collectors must follow Australian consumer laws. The ACCC and ASIC have a joint guideline for collectors and creditors (RG 96, issued 13 April 2021). It is not law in itself, but it explains how the law applies. Breaking it can suggest harassment, misleading conduct or unconscionable conduct.

The guideline says, in broad terms:

• Contact should be at reasonable hours. For phone calls, that is 7:30am to 9pm Monday to Friday, and 9am to 9pm on weekends. It recommends no contact on national public holidays.
• Contact should not be too frequent. It recommends no more than three times a week, or ten times a month, when contact is actually made.
• A collector should not threaten legal action on a debt that is out of time, because that can be misleading.
• Collectors should recognise that people in hardship need sustainable payment plans.

What you can do now

1. Take a breath and do not pay on the first call. Ask who they are, who the original creditor is, and what the debt is for. Ask them to send it in writing.
2. Check the debt. Is it yours? Is the amount right? Has interest or fees been added? Ask for proof, such as the contract or account statement. If it is wrong, tell them in writing and keep a copy.
3. Check the age of the debt. In Queensland the time to sue is usually six years. The guideline says it runs from when the right to sue arose, or from when you last acknowledged the debt, for example by making a payment. Before you pay or agree to anything on an old debt, get advice. A small payment can matter.
4. Ask for hardship help if you cannot pay. Tell the creditor, not just the collector, in writing if you can. For many credit contracts, the credit provider must tell you whether it will change the contract. The guideline says collectors should not contact you to collect until that decision is given. If the creditor says no, you can complain to AFCA.
5. Call the National Debt Helpline on 1800 007 007. It is free, confidential and run by financial counsellors. They can help you work out what you can afford, which debts to put first, and how to talk to the collector. They do not lend money or sell products.
6. Keep a log. Write down the date, time and what was said in each call. Keep letters and texts.
7. Complain if you are being treated unfairly. First complain to the collector or creditor. If that does not fix it, you can complain to AFCA.

Time limits

For the debt itself, there is usually a six year limit on suing, though it can be restarted. Get advice before you pay or agree to anything on an old debt.

AFCA says that for most complaints you should contact it within six years of when you first became aware of the loss, or two years after the firm gave its final response to your complaint, whichever is sooner. It can sometimes extend this. Check the current rules on the AFCA website.

If it goes further

If the creditor believes the debt is real, they can apply to a court or to QCAT for an order that you pay. If you receive court papers, do not ignore them. Replying quickly is important, because a court can make an order against you if you do not respond. The National Debt Helpline or a community legal centre can help.

Complaints about how a bank, lender or collector treated you can go to AFCA, which looks at them independently. The ACCC and ASIC also take reports about collectors' behaviour.

Questions to ask whoever helps you

• Is this debt really mine, and is the amount right?
• Is it too old to be sued on, and what happens if I make a payment?
• What can I say to the collector, and what should I avoid saying?
• What hardship options do I have with the original creditor?
• Is the collector breaking the guideline, and should I complain to AFCA?