What can a debt collector legally do?

There are rules and regulations governing debt collection in Australia. While businesses and individuals are entitled to seek money they are owed, it is important to ask what can a debt collector legally do to ensure your rights are not infringed in the process.

The Australian Competition and Consumer Commission (ACCC) has set guidelines about when and how a debt collector can contact you. These are designed to prevent undue harassment, like threatening you with jail, and unreasonable intrusion, such as calling you late into the evening.

What can debt collectors do in Australia?

Debt collection agencies should not contact you after 9pm on any day of the week. They can only call up to three times a week, or 10 times a month, between 7.30am to 9pm on weekdays and 9am to 9pm on weekends, and should avoid contact on national public holidays.

They also must respect your request if you ask them to contact you only in writing or through your lawyer. A visit to a debtor’s home should be a last resort.

 

 

Other restrictions on debt collectors

Australian law also protects you, and your spouse, partner or family member from harassment and prevents debt collectors from:

• • • • Coming on to private property without permission
      • Using physical force or coercion
      • Providing you with false or deceptive information, such as saying “you’ll go to jail if you don’t pay”
      • Exploiting your situation due to illness, disability, age, illiteracy, or lack of legal knowledge
      • Sharing information about your debt with third parties without your consent

Should you challenge a debt collector?

Don’t take the demand for payment at face value, even if you have bought from the business the debt collection agency is representing. It’s not uncommon for debt collectors or the companies hiring them to make mistakes, inadvertent or otherwise.

In Queensland, some people were pursued by debt collectors for Covid-19 test costs that they believed were fully subsidised by the government. One family was asked to pay $360 for three tests without any prior indication of charges. The invoices arrived a week later, and attempts to dispute the charges were unsuccessful. In July 2022, messages from debt collectors started to arrive, causing significant stress.

The controversial Robodebt scheme, which was run by the Australian Government from July 2015 until it was shut down in 2020, used income averaging to identify potential overpayments of welfare benefits, sending automated debt notices to hundreds of thousands of Australians. It raised more than $1.7 billion in unlawful debts, causing significant harm and leading to a royal commission. The Labor Government ended contracts with external debt collectors in June 2023.

 

 

Common debt collection mistakes

Debt collectors could also be trying to collect a debt you don’t owe due to a clerical error, or it could be a case of mistaken identity. This is why it's crucial to request written proof of the debt. There are also other areas in which the agency can run into trouble.

• • • • Chasing old debt - The age at which a debt is considered "old" or "statute barred" varies by jurisdiction. This is the period after which legal action to recover debt cannot be initiated. In most states and territories, a debt becomes statute-barred after six years, although in the Northern Territory, it's three years. In the Australian Capital Territory, it's six years for simple contracts but 12 years for deeds.
      • Failure to provide written notice - Debt collectors are legally required to provide you with a written statement that contains information about the debt, if you request it.
      • Attempting to collect fees or interest not included in the original contract - This is only allowed if your original contract includes such charges or your state law permits it.
      • Threatening legal action they can't or don't intend to take - It's against the law for a debt collector to do this.

Can I be responsible for someone else's debt?

Generally, you are only responsible for someone else's debts if you've co-signed a loan agreement or are a guarantor. A co-signer agrees to be responsible for the debt if the primary debtor defaults, while a guarantor promises to repay a loan if the borrower can't.

However, you should not be held accountable for someone else's debt if you are neither a co-signer nor a guarantor.

If you believe a debt collector is not behaving as they should, lodge a complaint with us, and we’ll help you handle it.