Debt collection

Debt collection takes place when creditors and collectors seek payment from consumers or businesses who are legally bound to pay or repay money they owe. Organisations that recover debts need to be aware of their legal obligations.

Principles of debt collection fairness

You should treat debtors and third parties with fairness, respect and courtesy. You should never:

  • harass or coerce them
  • treat them unconscionably, such as by taking unfair advantage of their vulnerability or disability
  • mislead them about the nature of their debt, their legal obligations, or about what could happen if they do not pay.

You must not pursue a person for a debt unless you have reasonable grounds for claiming that they are liable for the debt.

Acceptable reasons for contacting a debtor

You must only contact debtors for a reasonable purpose. You should not contact debtors more than is necessary.

Some examples of when contacting a debtor is reasonable include:

  • giving information about the debtor’s account
  • making a demand for payment
  • accurately explaining the consequences of non-payment, including any legal remedies available to the collector or creditor, and any service restrictions that may apply in the case of utilities, such as disconnection of electricity
  • arranging for repayment of a debt
  • suggesting a settlement proposal or alternative payment arrangement to the debtor
  • reviewing existing arrangements after an agreed period
  • finding out why earlier attempts to contact the debtor have not been responded to within a reasonable period
  • asking why an agreed repayment arrangement is not being followed
  • investigating whether the debtor has changed their residential location without informing you, when there are grounds for believing this has occurred
  • sighting, inspecting or recovering a security interest.

You may also contact a debtor at the debtor’s request.

Illegal behaviour when contacting a debtor

Under Australian law, a debt collector must not:

  • use physical force
  • use coercion, which is forcing or compelling the debtor or a third party, such as a family member, to do something
  • harass or hassle the debtor to an unreasonable extent
  • mislead or deceive the debtor, or try to do so, regardless of your intention
  • take unfair advantage of any vulnerability, disability or other similar circumstances affecting the debtor, as this could amount to unconscionable conduct.

Working to improve debt collection compliance

The ACCC has been focussing on debt collection compliance. 

We have engaged with debt collectors and creditor businesses, such as utilities and telecommunication companies, and provided guidance to help debt collectors ( PDF 141.39 KB ) and guidance to help creditors ( PDF 139.01 KB ) avoid breaching the Australian Consumer Law when engaging with debtors.

We continue to monitor debt collection reports and take enforcement action when we identify concerning practices.

For further information, the joint ACCC/ASIC Debt collection guideline for collectors and creditors is the comprehensive guide to best practice in debt collection. 

More information

Dealing with debt collectors