I’m being hassled by a debt collector
If you are being hassled by a debt collector or creditor, you must:
- Establish a plan for dealing with the debt
- Stop any harassment by the debt collector or creditor
- See if you can claim compensation for any loss, humiliation, distress, stress or inconvenience caused by the creditor or debt collector
How do I establish a plan for dealing with debt?
Even if you are treated unfairly by a debt collector, you may still need to pay money you owe. See Consumer Action’s fact sheet ‘What can I do if a debt collector calls’ for more information.
What debt collector behaviour is illegal or unlawful?
Debt collectors have a right to demand payment of a debt, accurately explain the consequences of non-payment and make arrangements for repayment of a debt (unless you’ve asked them to stop contacting you). If you do not pay, legal action can be taken against you.
You have rights – there are many laws controlling the behaviour of debt collectors and lenders. Two good placed to start are:
- the Australian Consumer Law and Fair Trading Act 2012 (Vic) which provides a list of prohibited debt collection practices
- the ASIC/ACCC debt collection guideline: for collectors and creditors which provides a useful summary of what debt collection conduct may breach the law. In some circumstances these guidelines may be treated as binding on a creditor or debt collector.
How do I know if the debt collector’s acts are illegal or unlawful?
It is not always easy to work out whether the debt collector is behaving illegally or unlawfully. If you are feeling pressured or stressed by a debt collector seek advice from the Consumer Action Law Centre’s free consumer advice line (03 96296300 or 1800 466 477 or firstname.lastname@example.org)
What can I do to stop harassment or unfair conduct?
Step 1: Keep detailed records of what the debt collector is doing
Step 2: Take action – write to the debt collector, complain to an EDR scheme or VCAT
Step 3: Complain to a regulator
1. Keeping records
Keep detailed written records of what is happening – note down the name of any person you speak to, the date and the time, a brief description of what happened and the names of any witnesses. Keep all communication including letters and text messages.
2. Taking action
Some options are:
- have a lawyer or financial counsellor represent you;
- write to the debt collector telling them to stop all contact – see Consumer Action’s fact sheet Debt Collection: letter to stop contact;
- write to the debt collector and ask them to stop harassment and only use certain methods of communication;
- make a complaint to EDR: if the dispute relates to a credit, telecommunications, energy or water company you should make a complaint to the EDR scheme to which the debt collector or the creditor belongs, such as:
- consider making a complaint to the Victorian Civil and Administrative Tribunal: if the debt collector is not a member of an EDR scheme. You should seek legal advice about making a complaint to VCAT.
3. Complaining to government regulators
You should also complain to ASIC for debts relating to loans or financial services (e.g. credit contracts and insurance) and ACCC for debts you owe in relation to products or other services you have bought (see details below).
There are two main benefits of complaining to a regulator:
- it can help the regulator take action to stop unfair practices and lead to improved behaviour by debt collectors and creditors in the future; and
- if you send a copy of your complaint to the creditor (debt collector) it sometimes encourages them to resolve your complaint.
- providing information;
- conciliating with creditors if creditors agree to participate; or
- using some complaints for prosecutions and other enforcement action against traders.
Can I claim compensation if I have experienced harassment and unfair debt collection practices?
In some circumstances you can claim any financial loss (such as lost wages) or non-financial loss (such as distress, humiliation, stress and inconvenience) if a creditor or debt collector engages in unlawful debt collection practices.
You may be able to seek compensation through VCAT – see Consumer Action’s fact sheet Taking your dispute to VCAT.
If your dispute relates to a credit debt (such as credit card, home loan, personal loan etc) both the Financial Ombudsman Service and Credit and Investments Ombudsman can award damages for non-financial loss, including stress and inconvenience.
Consumer Affairs Victoria: Debt collectors; your rights in Victoria (Financial Services Fact Sheet)
The funding for this fact sheet was provided by the Victorian and Australian Governments.
The information on this fact sheet is general and does not constitute legal advice.
MoneyHelp’s products and services have been prepared for the information of Victorians who are experiencing financial difficulty. Phone 1800 007 007 to speak to a MoneyHelp financial counsellor. A financial counsellor will discuss a range of debt payment options based on an individual’s circumstances.
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Last updated April 2016