Debt collection takes place when creditors and collectors seek to secure payment from consumers or businesses who are legally bound to pay or to repay money they owe. It is important that any organisation involved in recovering debt is aware of its legal obligations.
You should treat debtors and third parties with fairness, respect and courtesy. You should never harass or coerce them, treat them unconscionably or mislead them about the nature of their debt, their legal obligations or any possible outcomes if the debt is not paid.
You should not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.
Your communications with the debtor must always be for a reasonable purpose, and should only occur to the extent necessary, for example, in order to:
- give information about the debtor’s account
- convey a demand for payment
- accurately explain the consequences of non-payment, including any legal remedies available to the collector/creditor, and any service restrictions that may apply in the case of utilities (for example, electricity)
- make arrangements for repayment of a debt
- put a settlement proposal or alternative payment arrangement to the debtor
- review existing arrangements after an agreed period
- ascertain why earlier attempts to contact the debtor have not been responded to within a reasonable period, if this is the case
- ascertain why an agreed repayment arrangement has not been complied with, if this is the case
- investigate whether the debtor has changed their residential location without informing you, when there are grounds for believing this has occurred
- sight, inspect or recover a security interest.
You may also contact a debtor at the debtor’s request.
Under Australian law, a debt collector must not:
- use physical force or coercion (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 intention
- take unfair advantage of any vulnerability, disability or other similar circumstances affecting the debtor (this is an example of unconscionable conduct).