November 26, 2020

How to Dispute Debt

How to Dispute Debt

You have the right to dispute a debt that has already been paid - but it is important to educate yourself first so you can dispute the debt in the right manner and get the best outcome.

‍There Are 4 Main Reasons As to Why You Would Dispute a Debt:

  1. The debt has already been paid: A debt collector may mistakenly contact you even though the debt has been paid in full, or it was settled in another way.
  2. The debt should be less: This dispute arises when you disagree with the amount claimed.
  3. The debt is not yours: If you are approached about a debt you are unaware of, it may be a case of mistaken identity or identity theft. This being said, if you have agreed to be a co-borrower or guarantor for a loan, you could be held liable for the full amount of the debt. 
  4. The debt is “statute-barred”: Depending on the applicable statute of limitations, some old debts cannot be recovered if no court action has been taken to recover the debt, and a long period of time has passed since you last made a payment or acknowledged the debt. You will need to seek legal advice to determine whether you are eligible to dispute a debt on this basis. 

Ticking the Boxes: Due Diligence in a Debt Dispute



It can be a shock to learn that you are being pursued for a debt that you were not even aware of! But before you get in touch with the creditor or debt collector, you should first conduct your own due diligence.

1. Get Everything in Writing:

We strongly recommend against calling up debt collectors and getting upset or angry over the phone. Many collection agencies record incoming and outgoing telephone calls, and should a dispute about your debt be raised in a court of law, the last thing you would want is the contents of an outrageous recorded phone conversation to be used as evidence against you. Also note that your words may also be construed as an admission of debt if you are not careful! Instead, err on the side of caution, keep everything in writing by sending an email or debt dispute letter, and double check that all correspondence is professional, polite, and free from errors before you send it. In your dispute debt letter, use the term “alleged debt” rather than “debt” to avoid acknowledgement, and request copies of all relevant account statements, demand letters and court judgments, and request a stay of all further legal and/or collection action up until and for 28 days after this information is provided as requested. Also – make sure to check your mailbox and email spam folders, and follow up within a reasonable time if you have not received a reply (just don’t be rude or pushy)! If something has gone to your spam or the mail is running late – that is neither yours nor the other side’s fault – but you certainly do not want to get into trouble with potential looming deadlines, when the other side has replied unbeknownst to you! Be proactive and keep strong records in this process to ensure you get a timely outcome. 

2. Verify the Debt

Ask for an itemised statement of your account that clearly sets out: the amount of the alleged debt, the date it was incurred, how it was calculated, the details of all payments made, and confirmation of the payment methods and details. 

3. Provide Evidence

At this point, you should review the proof of debt against your bank statements. It will take some time to sit down and double check everything – but if you are disputing the matter, the onus rests with yourself to check that the payments match up to the creditor’s statement of account. If there are any amounts that are not accounted for, you will need to provide proof of those payments including the date and amounts paid, receipt numbers, and double check that you have made the payment to the correct payment details. If you have paid it to the wrong account number, you will need to place a request in writing to have those rogue funds either returned to you (if you have paid the wrong creditor) or allocated to the correct account (if you have made a typo). Be clear and concise in the evidence you provide, and make sure to black out any financial information that is unrelated to the debt. The last thing you want is to provide debt collectors with a full copy of your bank statement and day-to-day transaction history! Also – if you are disputing that the debt is not yours, you should first be very careful before you provide photocopies of your personal identification. Double check that the collector or creditor is a legitimate business by searching for them on the Australian Business Register operated by the Australian Government, and make sure that you send all correspondence to an official email or mailing address. If you are legitimately not the person who the debt collectors are chasing, they should cease action if you can provide evidence. However, do note that if you are the person liable, you cannot rely on a false declaration of your identity. 

4. Seek Professional Advice

If you follow this process, you should come to a clear resolution about whether are fully liable for the debt in question. However, if the other side is still claiming that you owe fees, interest or any other amounts which do not make sense to you - you should consider seeking professional advice. Whilst it can be frustrating when the other side will not concede to your point of view, you must also understand that the creditor or debt collector cannot act on your behalf for the purposes of disputing the debt. They may advise you of internal dispute resolution processes – however even if you take up this option, you may not get a favourable outcome. If you are unsure about how the other side has calculated the balance and interest, consider speaking to an accountant who can advise if the amount has been calculated correctly. Creditors and debt collectors also operate under complex laws, which can be hard for the average person to understand. If the amounts have been calculated correctly but you still want to dispute it, and especially if you are dealing with a legal matter – you should seek legal advice from a qualified lawyer who can assess the situation, explain where you stand legally, support you through a plan of action, and possibly prevent a worse outcome (such as getting a default judgment or getting slugged with even more fees)! Note that whilst there are Legal Aid services in Australia, there are usually means tests and guidelines that must be met before you will be granted free legal aid. Also note that there can be lengthy delays in having a free legal service represent you. The following are a list of Legal Aid centres in Australia.

  1. ACT - Legal Aid ACT 1300 654 314
  2. NSW - Legal Aid New South Wales 1300 888 529 or 02 9219 5000
  3. Northern Territory - Northern Territory Legal Aid Commission 1800 019 343
  4. Queensland - Legal Aid Queensland 1300 651 188
  5. South Australia - Legal Services Commission of South Australia 1300 366 424
  6. Tasmania - Legal Aid Commission of Tasmania 1300 366 611
  7. Victoria - Victoria Legal Aid 1800 677 402 or 03 9269 0120
  8. Western Australia - Legal Aid Western Australia 1300 650 579

5. External Dispute Resolution Schemes

External Dispute Resolution Schemes exist for circumstances where all other avenues for dispute resolution have been exhausted. Under the ACCC and ASIC, many industries belong to an independent external dispute resolution (EDR) scheme – and it is a legal requirement for many creditors. Note that matters referred to EDR schemes will be reviewed objectively and unemotionally by an independent party to ensure that the creditor or debt collector has correctly fulfilled their obligations, and some schemes will not accept a dispute if the matter can be resolved in court. It is therefore important to make sure you have a legitimate basis before referring a complaint to an EDR scheme (and not just because you are upset and want to get out of the debt), as they can take some time, and do not always result in a favourable outcome.

Should I pay Debt Collectors or Original Creditor?

should I pay debt collectors or original creditor

Debt collections can be conducted “in house” or outsourced. If the debt collection has been outsourced (as in the creditor still legally owns the debt but a debt collection agency conducts the collection duties on the creditor’s behalf), the debt has been “sold” (in which case you are now liable to a third party collections agency), or the debt is subject to a legal action, you legally may be required to make payments to a third party. Double check with the original creditor as to who you should be paying. Please note that disputing a debt simply because it has been outsourced or “sold” to a third party, does not form a legally valid basis for dispute. In any case, we recommend you follow the above steps and seek the advice of a qualified professional if you are unsure where you stand in relation to a debt dispute. 

Debt Collectors Australia

Some of the biggest collection agencies in Australia include Collection House Limited, Baycorp, Credit Corp Group Limited, Recoveries Corporation Pty Ltd, Illion, Pioneer Credit Limited, Panthera Finance Pty Ltd and Prushka Fast Debt Recovery Pty Ltd, and of course the big four banks, Commonwealth Bank, ANZ Bank, Westpac and NAB. Collections in Australia are highly regulated and should act in a proper manner.


If you are struggling with debt and are looking for a solution to get out of it, leave us a message or give us a call on 1300 003 328.

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