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How debtors should be treated
People who owe money are commonly referred to as debtors.
Debtors, and others connected to a debt, should be treated with fairness, respect and courtesy.
A debt collector should only contact a debtor for a reasonable purpose and only when necessary.
Case study video
Watch the video for information about what debt collectors can and can't do.
Knowing your legal rights around what debt collectors can and can't do will put you in a stronger position if you're being contacted by debt collectors.
For example, Steve was recently made redundant.
Without regular income, he fell behind on his bills and slipped into debt.
After a while, a debt collector contacted Steve and although he told them about his circumstances, they insisted that if he didn't repay the debt in one payment, a warrant for his arrest would be issued.
This didn't seem right to Steve, so after being contacted numerous times in one week by the collector, he sought free advice from a community lawyer.
The lawyer informed Steve that a warrant for his arrest could not be issued, and that he could enter into a repayment plan that fit his financial circumstances. The lawyer also sent a complaint to the collection agency for undue harassment, and making false statements.
With the pressure off, and an achievable repayment program in place, Steve was able to pay off the debt over a number of months. To find out more, check out our new guide on dealing with debt collectors.
The story, all names, characters, and incidents portrayed in this video are fictitious. No identification with actual persons (living or deceased), places, buildings, and products is intended or should be inferred.
Illegal behaviour and debt collection
Under Australian law, a debt collector must not:
- use physical force
- use coercion
- unduly harass or hassle the debtor
- mislead or deceive the debtor
- take unfair advantage of any vulnerability, disability or similar affecting a debtor. This can amount to unconscionable conduct.
These laws also apply when contacting anyone connected to a debtor. This includes a spouse, partner or family member.
Report assault or threats of violence to the police.
Debt collectors must protect the personal information of debtors and third parties. Contact the if a debt collector or creditor has broken privacy laws.
When and how a debtor can be contacted
Acceptable reasons for contacting a debtor
There are situations where contacting a debtor may be reasonable.
- Giving information about the account and money owed
- Making a demand for payment
- Accurately explaining the consequences of non-payment, such as legal remedies the debt collector or creditor can seek, or service restrictions that may apply, such as disconnection of a service
- Arranging for repayment of a debt
- Suggesting a payment plan
- Reviewing existing payment plans after an agreed period
- Finding out why the debtor has not responded to contact
- Asking why an agreed repayment arrangement is not being followed
- Investigating if the debtor has changed their address without informing the debt collector, when there are grounds for believing this has occurred
- Sighting, inspecting or recovering a security interest, such as a vehicle.
When contact with a debtor can occur
Contact with a debtor should be limited to:
| Type of contact | Days | Contact should be limited to: |
|---|---|---|
|
Contact by telephone |
Monday to Friday |
7:30 am to 9 pm |
| Weekends | 9 am to 9 pm | |
| National public holidays | No contact recommended | |
| Face-to-face contact |
Monday to Friday |
9 am to 9 pm |
| Weekends | 9 am to 9 pm | |
| National public holidays | No contact recommended | |
| All workplace contact | Debtor's normal working hours if known, or 9 am to 5 pm on weekdays | |
Visits to a debtor’s home, or another agreed location, should be a last resort. The debtor can also ask for, or agree to, a visit.
If repayment plans can be worked out over the phone or in writing, face-to-face contact should not be needed.
Improving debt collection compliance
We review reports from consumers and small business and take action when we identify concerning practices.
Guideline for collectors and creditors
Guideline for debtors
