Disputing a debt

If you are contacted about a debt you do not owe, or disagree with the amount being claimed, you have a right to dispute it.

Verifying a debt

Make sure you actually owe the debt. Ask the debt collector for proof (such as documents or account statements) if you think the debt is not yours or if you disagree with the amount demanded. The onus is on the collector to provide this information.

Get independent advice if you are still unsure whether you have to pay some or all of the debt. Free legal aid and community legal services are available in every state and territory.

Disputing a debt

Once you (or your financial counsellor or other representative) have notified the debt collector that the debt is in dispute, debt collection activity must stop until this is resolved.  Also, a default listing on your credit report should not be made during this period.

For more information on credit reports, including where to obtain a copy of your report and how to make sure it is accurate, visit the ASIC MoneySmart website.

If the debt has been paid

Sometimes a debt collector might contact you about a debt even though you’ve paid it in full, or it has already been settled in some other way. Contact the collector, preferably in writing, and advise them that the debt has already been paid.

Provide copies of any records or information that proves you’ve paid the debt.

You should also ask the debt collector why they are contacting you. If the collection activity continues without an adequate explanation, make a complaint.

If the debt should be less

You might accept that you owe the debt but disagree with, or are unsure about, the amount claimed.

If this is the case, ask for an itemised statement of your account that clearly sets out:

  • the amount and date of the alleged debt
  • how it is has been calculated
  • details of all payments made and amounts owing (including principal, interest, fees and charges).

If it's not your debt

If you are approached about a debt you know nothing about, it may be a simple case of mistaken identity. Showing your driver's licence or other proof of identity may resolve the situation. However, the decision to show identity is yours – you cannot be forced to do so by a debt collector.

You should also ask for a copy of your credit report to make sure no other fraudulent transactions have been made in your name.

Responsibility for someone else's debt

You are generally not legally responsible for paying another person's debts unless you have agreed to be a co-borrower or guarantor for a loan. If you are considering becoming a co-borrower or guarantor, think carefully – if the person defaults on their repayments, you could be legally responsible for the full amount of the debt.

Get advice if you think you were pressured into agreeing to be a co-borrower or guarantor, didn’t understand the commitment you were making or felt threatened in any way.

Being taken to court

Creditors have the right to sue you to recover money owed to them. If you receive notice that you are being taken to court (such as a summons or statement of claim/liquidated claim), you should seek legal advice immediately.

If you’re sure that you owe the amount claimed, if possible pay the amount in full now. If you can’t pay the full amount think about applying, within the timeframe allowed, to pay by instalments. You can arrange this with the court staff.

Get legal advice immediately if you disagree with the debt because you think you don’t owe the amount claimed, owe a different amount, or have a valid defence.

A defence is a legal reason why a debt cannot be enforced by a court. For example, there are laws that stop debts being collected through the courts after a certain period of time.

If you have a defence against paying the debt, you’ll need to file documents with the court. You should seek legal advice before doing this.

Remember: you might still be able to negotiate a repayment plan, even if a court order has been made against you.

Old debts

Some old debts cannot be recovered by a debt collector. If you are contacted about a debt that's several years old, do not confirm the debt or make a payment until you get independent advice. You might have a defence against a debt if:

  • a long period of time has passed since you last made a payment or confirmed the debt
  • no court action has been taken to recover the debt in the meantime.

Generally, you can rely on this defence if six years have passed since you last made a payment or confirmed the debt, and there is no court judgement against you. In the Northern Territory, the time period is three years.

If this is the case, recovery of the debt through the courts is said to be ‘statute-barred’ and the courts will not enforce the debt. If you think a debt collector is contacting you about a debt that is ‘statute-barred’, you should get legal advice before you make any payment or confirm the debt in writing.

When to make a complaint about a debt collector

If debt collectors are in breach of what they can do (outlined above), or you are being harassed or intimidated by a debt collector, there are a range of actions available to you.

Call the National Debt Helpline for free and confidential advice National Debt Helpline: 1800 007 007
Make a formal complaint Sample letter of complaint on the Financial Rights Legal Centre website
Report the debt collector to ACCC See our consumer complaint page to find out more information
Ask if the debt collector belongs to an external dispute resolution (EDR) scheme Nearly all financial service, energy, water and telecommunications businesses belong to an EDR scheme that can assist you with dispute resolution

See the ASIC MoneySmart website for information on free financial counselling available in your area or visit the Financial Counselling Australia website.

More information

Help when you're in debt


Financial Rights Legal Centre