How Debt Collection Works in Australia

When you default on your loans, you get a bad credit rating and the loan is transferred to a collection agency. If you hear horror stories about harassing collectors, it’s possible that it could also happen to you. However, if you know the law on how debt collectors should work, you shouldn’t have to worry about deliberate attempts of collectors to embarrass you. Under all circumstances, they are only allowed to do the following:

A collector must only contact you for the sole purpose of collecting the debt. He may call to:

• Give or ask information about your account
• Express a request for payment * Articulate the consequences if you don’t pay the debt such as legal action or restriction to utilities in the future such as water and gas.
• Come up with arrangement for you to pay the debt
• Find out why you never responded within his earlier attempts to contact you within a reasonable period of time
• Find out why previously agreed upon arrangements have been failed to be met
• Confirm whether you have relocated or changed addresses without confirming or informing the collecting agency
• Recover a security interest

Under no circumstances should a collector do the following:

• Frighten or intimidate you
• Tire out and demoralise you
• Embarrass you in front of other people

So you see, despite those horror stories you hear, the truth is that collecting agencies aren’t allowed to scathingly demand payment from you. Persistence is different from harassment and you should be able to differentiate between the two. And if you fear collectors might go on and sneakily divulge your embarrassing bad credit situation to other people, don’t worry because here are some more limitations for debt collectors:

• Under the privacy law, debt collectors in fact have the obligation to protect the privacy of debtors. Upon contacting a debtor, they are required to ascertain that the person they are dealing with is indeed the debtor. They must do this before divulging any information about the debt and its accompanying recovery process and other sensitive information.
• The collector can introduce himself only if it is being demanded by the person at the other end. However, they must still do this without spilling any important and sensitive information about the debt involved.
• The collectors are obliged to disclose who they are, who they work for, and the purpose of the contact once it is established that it is the debtor that’s on the other end of the line.

So don’t fear if it’s your turn to face debt collectors. Know your rights and pay what you owe. Everything will be just fine.