Many unfortunate circumstances can lead to non-repayment of a debt, such as illnesses, emergencies and other such disasters. While lenders do have a legal right to pursue a debtor, the debtor is protected from undue harassment and bullying from debt collectors.

Debt collector’s obligations

When a collector pursues a debtor, they must abide by certain rules and regulations, as set by the Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC). First and foremost, a collector can only initiate contact for a “reasonable purpose”, meaning a collector must be sure the person they are contacting is responsible for paying any debt. Unscrupulous collectors sometimes use trickery and coercion to fool people into thinking they have debts or previous obligations were not met. A collector must also verify the identity of the debtor before disclosing any information about the debt. They can, however, reveal some limited information about the debt to certain third parties, such as spouses and family members.

When a collector contacts debtor, he must identify him or himself and the reason for the call. Additionally, the following information should be disclosed to the debtor:

• Information on the account
• Formally request repayment of the debt
• Lay out a debt repayment plant, or any alternative, legal means of settling
• Explain repercussions of failure of repayment

Debtor’s rights

First and foremost, a debtor has a right to request for information regarding the debt, before entertaining the collector. The collection agency then must furnish the details to continue contact with the person.

A collector is allowed to make contact with a debtor during reasonable hours of the day and a certain number of times per week. For example, telephone calls can only be made from 7:30am to 9pm on weekdays, 9am to 9pm on weekends and not at all during holidays. Calls and letters should be limited to 3 times per week (per account).

Face-to-face meetings are strictly regulated as well. A collector may only visit when all other means of communications (telephone, mail etc.) have been unsuccessful. A mutually agreed time and place should be set, and unscheduled visits are highly discouraged.

Finally, and most importantly, a debtor cannot be subjected to any undue harassment or coercion from any collector. According to Justice Hill of the Federal Court (in the case of ACCC vs. the Maritime Union of Australia), “the frequency, nature or content of such communications is such that they are calculated to intimidate or demoralise, tire out or exhaust a debtor, rather than merely convey the demand for recovery, the conduct will constitute undue harassment. … Generally it can be said that a person will be harassed by another when the former is troubled repeatedly by the latter.”

Protection from abuse

If a collector persists on using illegal methods, he or she can be reported to the proper authorities. A debtor should keep concise records of the harassment (such as writing down the times and dates of each instance, keeping letters and correspondences). The collector (or the agency) should be sent a letter asking them (politely, but firmly) to stop the harassment. If they persist using such tactics, then a complaint may be filed with a consumer protection agency such as ASIC or ACCC.

For the complete guidelines, the publication “Debt collection guideline for collectors and creditors” can be downloaded from the ACCC website.

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