Consumer

Pay Back

^{Graeme Samuel | DECEMBER 2008 / JANUARY 2009}

Your credit card’s maxed out and the debt collectors are pounding on your door. Do you know your rights? Are they crossing a line? Is the debt even yours? Australian Competition and Consumer Commission chairman, Graeme Samuel, explains.

Borrowers are continuing to report harassment at the hands of debt collectors, despite efforts by the industry and regulators to deal with the problem.

A recent phone-in day conducted by the ACCC and the Australian Securities and Investments Commission found persistent allegations of collectors overstepping guidelines widely accepted by the industry.

The debt collection industry has worked hard on dealing with issues of concern to the community in recent years. In 2005 the ACCC and ASIC released the publication Dealing with debt: your rights and responsibilities and a debt collection guideline for those working in the industry. Most operators have adopted the guideline as the standard for their business.

However, the phone-in day and industry forum that followed suggest community members are still falling victim to heavy-handed treatment by a small group of debt collectors and creditors.
 
ASIC and the ACCC have both recorded an increase in the number of complaints in this area. Of the 145 calls received during the phone-in day, around half reported problems with third-party collectors acting as agents or assignees. The most common complaint was of harassment and coercion.
 
Among the most complained about issues were disputes about the debt, difficulty accessing information about the debt, multiple collectors approaching the same consumer, incorrect identification of who was actually responsible for the debt and inflexibility on behalf of collectors in negotiating payment plans.

Mistakes do happen, so don’t be afraid to speak up to protect your rights. Over the last three years the ACCC has had 144 contacts from people concerned they have been falsely identified by debt collectors.

When owing money to a business it’s easy to feel powerless when trying to negotiate repayment options. But it is important to remember those seeking to recover debt must follow the limits of reasonableness or risk breaching the law.

Under the ACCC/ASIC guideline, debt collectors should not contact you more than three times a week and should not contact you earlier than 7.30am or later than 9pm during week days, or before 9am or after 9pm on weekends. They should not visit your workplace unless you give permission, and cannot disclose your financial details to others.
 
Threats, using family members or friends to get to you, making excessive contact or trying to force you to pay sooner than you had originally negotiated are also against the law.
 
Generally, debt collectors should only visit your home if there is no other way of contacting you and should leave when asked to do so.

In some cases debts can be sold on to debt collection companies, and those businesses are entitled to contact you to seek payment. However, regardless of your debt situation, they must act professionally otherwise they may be in breach of the law.

This means they should be prepared to negotiate a payment plan rather than demanding the entire money up-front, and once that plan is agreed to, it should be followed by both sides.

If you are contacted about a debt you do not owe or disagree with the amount you owe, you have a right to dispute the debt.

First, your requests need to be reasonable. When disputing a debt, collectors should be prepared to give you account information and copies of contracts. If the debt collector is acting on behalf of a creditor, they may refer your request to the creditor.

For home loans (except for investment properties), personal loans and credit card debts, you have a specific right to this information by law.

Once you have asked for this information, the debt collector should not continue trying to recover the debt until this information has been provided to you.

Also, a default listing on your credit report should not be made during this period.

Of course it’s also important to acknowledge that businesses you owe money to have a right to seek repayment from you, and your rights do not absolve you from your responsibility to repay debts.

For impartial financial information contact Centrelink’s Financial Information Service on 132 300. The Australian

Financial Counselling and Credit Reform Association www.afccra.org/counselling.htm has details of financial counsellors in your area.

More information about your debt collection rights is available at www.accc.gov.au or by calling 1300 302 502.

Dealing with Debt

1. Manage your finances and plan your budget so that debts don’t build up and take you by surprise.
2. A free and independent financial counselling service can help if you are having trouble paying your debts or managing your budget.
3. If you cannot meet your financial commitments, contact the creditor (the business or person you owe money to) without delay to discuss a repayment plan.
4. When negotiating a repayment plan, be realistic about what you can pay – taking into account your other financial commitments. Be honest with the creditor or debt collector about your situation.
5. Keep copies of any letters you send or receive and notes of any conversations you have.
6. Make sure you actually owe the debt. Ask for proof (e.g. documents, account statements) if you think a debt is not yours or if you disagree with the amount demanded. Get independent advice if you are still not sure whether you have to pay some or all of a debt.
7. If you are contacted about a debt that is several years old, do not confirm the debt or make a payment until you get independent advice.
8. If you are threatened with legal action, get advice about your options as soon as possible.
9. If you are contacted about a debt, be cooperative, and expect to be treated professionally. Make a formal complaint if a creditor or debt collector misleads you, threatens you or is abusive.