There is no getting away from it, debt collectors are employed to bully you into making payment, irrespective of the effect that might have. Like all bullies though, they have no real power over you. Their only tactic is to intimidate with bluff.
First of all, debt collectors have no special rights or powers. They are just clerks doing a dirty job. The debt collection process they use is the same one you would use to collect money owed to you. The civil debt recovery process entitles creditors to take legal action to collect an unpaid debt.
Certainly, the civil debt recovery process enables creditors to force repayment by the seizure and sale of surplus assets, garnisheeing earnings or making you bankrupt. What debt collectors don’t want you to know though is that other laws protect essential property like car, household furnishings, tools of trade and much more. There is even protection for at least the first $50,000 of your annual income.
You can’t be sent to jail for not paying your debts. You can be made bankrupt but this is the very law that offers the protections to your essential assets and income so it won’t harm you.
You can try to deal with debt collectors reasonably. Suggest payment terms that are affordable to you. Debt collectors are reluctant to agree to what you offer, they always want more. You don’t have to pay more if doing so causes you hardship. Jus pay what you can afford. Suggest a settlement offer. Often the older a debt is the more inclined the creditor is to taking what they can get. The debt collector too, is keen to earn a commission.
Debts can be sold to debt collectors. Typically, debt collectors will pay less than 10% of the full debt. So any offer of settlement that offers more than 10% of the original debt is a good deal for the debt collector. Ask the debt collector if the debt has been purchased and for what amount. Then you can offer a fair settlement payment.
A debt that is six years old, with the exception of tax debts, might not be recoverable at all. A little known law called the Statute of Limitations, prevents creditors taking debt collection action if it has been more than six years since the last payment was made, the debtor last acknowledged the debt, or a step in the legal action was taken. For this reason, if it has been some time since you last heard from a creditor, it is best not to acknowledge the debt or agree to make repayments without establishing whether the Statute of Limitations might apply.
Before beginning any discussion about repayment, you should insist the debt collector provides you with an itemized statement of your account showing exactly how the debt is calculated and the total debt owing. If you disagree with the debt, you can write to the debt collector saying that you dispute the debt and explaining what you calculate the debt to be and why. Of course you then have to pay that amount.
Debt collectors are not allowed to bully you.
The Trade Practices Act is clear on what is and what is not permissible behaviour by debt collectors. In particular: -
- A debt collector may not tell family, friends, neighbors, work colleagues, employers or anyone else for that matter, about your debt.
- A debt collector can only contact you at a phone number or address that you have approved.
- If you have appointed a representative, the debt collector must only contact that person to disuss your situation.
- A debt collector can only make contact three times a week and ten times a month.
- A debt collector should only visit if all other reasonable attempts at contact have failed. You can refuse a face-to-face visit and the debt collector must leave.
- A debt collector is forbidden to harass, coerce or make threats.
If you feel that you are being bullied you can make a complaint to the Office of Fair Trading or Consumer Affairs in your State.
Having said all of this, you cannot hide from your responsibility. Creditors via their debt collection agents are entitled to ask for their money. You would do the same in their shoes. Fobbing them off does not solve the problem for long. If you find yourself scared to answer the phone, open mail or answer the door, then you need to get advice on solving your debt problems.
For further assistance (CLICK HERE) or call 1300 305 510, Australia-wide.
