Australian citizens that find themselves in debt should be aware that the debt holders have a legal right to collect on those debts through the use of a collection department or agency. These agencies instruct their personnel to contact the debtor and to negotiate a repayment of the debt. Ultimately, they encourage a full repayment at the time the call or letter is placed. However, during these negotiations, arrangements can be made to accept monthly payments on the bad debt.
In some cases, when the collection agency is unable to negotiate a deal, they have the right to seek legal action against the debtor under the collection laws of that state or territory. The courts can enforce the repayment terms or order personal property to be sold to cover the expenses of the debt. In some cases, the court can order a specific amount deducted from your payroll each week to repay the debt.
Collection agencies are regulated by many Australian laws, and a credit collection agency is strictly forbidden from harassing a debtor in an effort to collect on the debt. Harassment can be defined in many ways, including:
• Threatening legal action that the creditor does not have the authority to pursue. This includes threatening lawsuits or seizure of property if the threat cannot actually be followed through in court. Using the threat of court as a way to force repayment instead of a last-resort for collection. Using legal threats to intimidate the debtor, or issuing a seizure of personal goods that is for more than what the creditor is entitled.
• Using language that is demeaning and disrespectful to the debtor. This includes the use of obscene words, name-calling, making comments about the debtor’s life situation, life’s choices, or appearance.
• Using collection tactics that are meant to publically shame or embarrass the debtor. This includes sending correspondence that states it is a debt collection letter on the outside of the letter, informing family, friends, or co-workers of the debt, or posting debt collection information on social sites.
• Use aggressive behaviour or actions to threaten or intimidate the debtor. This includes making threats of force on the victim, threatening destruction of personal property, or telling the debtor that they are being watched or are under surveillance. This also includes any threat of force against the debtor, their friends or family, or their property.
• Creating misleading information by not providing the correct information about the debt or the consequences of not paying the debt.
• Trying to coerce the debtor into paying the bill by placing pressure on their spouse or child, family members outside of their immediate household, friends, or co-workers. This includes harassing phone calls and letters to these individuals about you or your debts. Included in this area are any threats to or about the children of the debtor. This will also include the debt collector issuing threats of making false accusations about the debtor to Child Welfare Services about possible abuse issues.
• The debt collector cannot use any action that takes advantage of any vulnerabilities of the debtor. This includes using any disability or personal weakness against the debtor to the creditor’s advantage.
• The debt collector cannot issue any written documents that were created to look like legal or court documents in an effort to defraud the debtor into believing that legal action has been taken against them for the debt.
What You Should Expect From A Credit Collection Agency
Under Australian law, credit collection agencies have the rights to aggressively collect on a debt if they remain within the guidelines of the law. To remain within these guidelines, a collector has the authority to:
• Communicate with the debtor by means of telephone or postal service to establish a point of contact regarding the debt. This must be done in a reasonable manner and not with the intent to harass.
• When contact has been made, the collection agency has the right to inform the debtor of the amount that is due, provide accurate information about the account in its current status, and inform the debtor of any possible consequences that may occur if payment is not received. If this debt is a utility payment, the creditor must tell the debtor when any possible shut-offs for the utility will occur if payment is not received.
• The creditor can make a demand for payment in full, make arrangements for instalment payments, or agree to a settlement amount to absolve the debt.
• The creditor may inquire, under reasonable circumstances, why the bill has not been paid to date, verify if the residence of the debtor is the same that is listed on the account, and inquire as to why any previous arrangements have not been met.
Under the guidelines of the Fair Trading Act 1992 (ACT) 26(2)(i) and the Fair Trading Act 1999, 21(2)(h), unreasonable communication with a debtor is strictly prohibited. The guideline that has been set forth as permissible communication is as follows:
Contact may be made with the debtor at home between the hours of 7:30a.m. and 9:00p.m Monday through Friday and 9:00a.m. and 9:00p.m. on the weekends. Contact on National Public Holidays is forbidden.
Contact made in person can be conducted each day between 9:00a.m and 9:00p.m. Contact on National Public Holidays is forbidden.
Contact made at a place of employment can only take place on the weekdays between 9:00a.m and 5:00p.m. Again, contact on National Public Holidays is forbidden.
If the debtor does not want to be contacted at their place of work, they must provide a way for the credit collection company to contact them outside of this area. If the debtor is unable to be contacted in any other manner, the collection agency has the right to make contact at place of employment, even if this is against the wish of the debtor.
If the debtor makes a face-to-face appearance in an effort to collect a debt, and is asked to leave the premises, they must comply with this request immediately. Failing to leave the property could be viewed by the courts are coercion or intimidation and a form of harassment.
Other Important Facts You Should Know
Under Australian Consumer Protection laws, a collection agency must stop all collection activity against a person who files for bankruptcy protection. Any collection agency that tries to collect on one of these debts is in violation of the law.
If you believe that you are being unduly harassed by a credit collection company, you should report the violation to the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission. Both of these agencies are there to protect consumers from predator credit collections and to enforce the regulations placed on these companies. If the harassment involves any threats to you, your family or your property, you should inform the police immediately.
For more information about the laws that govern credit collection activity in Australia, you are encouraged to visit accc.gov.au.