Debt collection

Part 2: Practical guidance

If you are involved in collection activity, either as a creditor, agent or assignee, this part of the guideline is addressed directly to you. The term ‘debtor’ includes an alleged debtor, and the term ‘debt’ includes an alleged debt. The term ‘debt collector’ includes creditors, independent collection agencies, collections departments within businesses, debt purchasers, assignees, agents, lawyers, government bodies engaged in trade or commerce, and other persons 3 collecting on behalf of others.

A flexible, fair and realistic approach to collection

The need for collection activity will be greatly reduced when debtors act promptly and responsibly, and collectors are flexible, fair and realistic. Debtors may default on their debts because of circumstances beyond their control, such as unemployment, illness or family breakdown. While there are cases of fraud and deliberate evasion, most people are honest and want to meet their commitments if given a reasonable opportunity to do so.

Relationship with court debt recovery processes

Broadly, debts may be recovered either through the courts, or by using creditor or collection agency personnel to negotiate repayments.

Debt recovery through the courts is largely regulated by state and territory law and the procedural rules of the courts. The recovery process may include the repossession of assets, securities or other legal enforcement of security interests.

This guide is mainly concerned with non-court debt recovery processes and informal collection activities before a court action is commenced or after a court judgment.

Debtors’ responsibilities

While this guideline focuses on the responsibilities of creditors and collectors, the ACCC and ASIC recognise that debtors have responsibilities too.

Debtors are legally responsible for paying the debts they legitimately owe. Where they owe the debt in question, debtors should:

What this guideline does

This guideline:

  • explains the ACCC’s and ASIC’s views on the laws that they regulate
  • provides examples on how the law has been applied in particular cases and details of court outcomes
  • gives guidance on what you should and should not do if you wish to minimise the risk of breaching the Commonwealth consumer protection laws
  • notes other laws and regulations not regulated by the ACCC and ASIC that are relevant to debt collection.

Part 1: Using this guideline

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have produced this guideline. The ACCC and ASIC enforce Commonwealth consumer protection laws, including laws relevant to debt collection. For more information about the responsibilities of each agency, see appendix A.

The terms ‘debt’ and ‘debtor’ are used in this guideline to include alleged debts and alleged debtors respectively (see the glossary in appendix C for more information on terms and phrases).

Important notice

This guideline is designed to give you basic information; it does not cover the whole of the Competition and Consumer Act 2010 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) or other relevant legislation and is not a substitute for professional advice.