If you’ve seen the movie Confessions of Shopaholic you will be familiar with the lengths that some debt collectors go to in order to track down people who owe money and the extremes that people go to in order to avoid being tracked down.
Whilst it’s unlikely that you’ll find yourself scrambling across the boardroom table to avoid your colleagues finding out that you owe considerable amounts of money (like Isla Fisher’s character “Rebecca” did in the movie), you may find yourself feeling a little unstable if you end up on the receiving end of the track down from a debt collector.
However, debt collectors can legally use tactics including phone calls to mobile phones, landlines, workplaces, visits in person and now even social media, to find you and demand your prompt payment. In this post, we will give you some realistic tips on how to deal with debt collectors, so you don’t have to live with the dread of answering unknown numbers or be scared by a knock on the door.
Dealing with Debt Collectors: Why Would the Debt Collector Call Me?
Reasons for a debt collector to call you can vary from the following:
- Requiring information about your account,
- Demands for payment,
- Offering to settle an account or make alternative payment arrangements,
- Explain restrictions on services like utilities, and
- Enquire as to why you may not have kept to an agreed debt repayment plan.
Even though it’s not an ideal scenario to find yourself in, you should never feel fearful of hearing from a debt collector. You should always feel safe knowing that there are options and ways to move forward without having to avoid answering calls in case they are from a debt collector.
Dealing with Debt Collectors: How Might They Contact Me?
If you are late on a bill, have defaulted on repayments or have not met the requirements of a payment plan, you are likely to hear from a debt collector by phone, SMS, letter or email. Note that if you receive contact via social media or in person – this signals that the matter has most likely gone legal.
When debt collectors contact you, they are not allowed to tell anyone else who may answer the phone or door that they are a debt collector, and they must always respect your privacy. This includes limiting the number of times they can call you in a day, week or month. For example, if they attempt to contact you by phone, they cannot do so more than 3 times in the week, or 10 times in the month.
All attempts at contact must be within reasonable hours, no earlier than 7.30am and no later than 9.30pm – however, these timeframes are only industry guidelines, and if the only way to reasonably contact you or deliver legal documents to you is outside of these hours, a court of law may grant such conduct permissible with no penalty to the collections agent. Also note that in Australia, legal documents can be deemed to be served if they are left with a resident of your address who undertakes to pass documentation and pass it on to you, and it can also be left with an employee at an address of your registered business.
Dealing with Debt Collectors: What Should You Do If a Debt Collector Contacts You?
It’s best to be cooperative – remember, the debt collector on the other end of the phone is a person too, and they may have the discretion to make decisions about your account, so it’s in your best interests to be polite and respectful, and regardless of how you behave, they should always treat you in a professional manner. If you owe debts, you also have a responsibility to:
- Be honest and forthright about your current financial circumstances, including other debts.
- Return missed calls and respond to correspondence from creditors or debt collectors promptly.
- Enter into a repayment arrangement if this is within your means.
- Ensure your creditors/debt collector are abreast of changes to your contact details (including your phone number, email, and residential address).
How to Deal with Debt Collectors When You Can’t Pay: Knowing Your Rights
Attempts to contact you via social media or email must respect your privacy, and the debt collector must be sure to know that the account cannot be accessed by, or the messages read by, anyone other than the person who’s name the debt is in. A debt collector may not use methods of intimidation, force or trespass, and cannot remain on your property without a court order. They should also never verbally abuse, be deceptive or use unfair conduct.
How to Deal with Debt Collectors: Can I Complain?
If you believe you are being unfairly treated by a debt collector then you can lodge a complaint to a reporting body. For unsecured debts such as loans, credit cards and other financial services, contact ASIC on 1300 300 630. For debts such as phone bills, utilities, tradespeople or other services providers, contact the ACCC on 1300 302 502.
Debt Assistance in Australia: What Can I Do to Resolve the Issue?
If you are being contacted by a debt collector then there are a few options you can take to resolve the issue.
1. Change the Payment Plan Due to Hardship.
If the debt the collector is pursuing you over is about a personal loan, credit card, or home loan for a residential property (this includes investment properties) then you can apply to have your payment plan changed on the basis of hardship via a court judgement.
2. Negotiate a Debt Repayment Plan.
If the debt is yours and you are simply having a difficult time making repayments then you can negotiate to pay the debt back in smaller amounts over a longer time. You may need to provide proof of your financial situation to show what you can afford to be paying. Speak to the debt collector about the possibility of making a lump sum payment (if you can) and sometimes in these cases, they will finalize the whole debt even if you have only paid part.
3. Seek Assistance.
If you are unable to negotiate a way forward that suits you and the debt collector or creditor, then you may be able to seek debt assistance in Australia with some free legal advice through Legal Aid.
That’s all for our tips on how to deal with debt collectors! Whatever you do, don’t be like Rebecca in Confessions of a Shopaholic and go into hiding. Chances are your debt collector will find you anyway, so it’s best to always tackle these problems face on and seek the help you need to move forward. It is never as bad as it seems! We’re here to explain and help take the stress and uncertainty out of dealing with debt collectors in a bad debt situation. If you ever need help with your debt, call us on 1300 003 328 and take advantage of our free credit counselling.