Debt Collection Practices for Australian Businesses
What can I do to pursue a debt?
Debt collection is a legitimate and necessary business activity where creditors and collectors are able to take reasonable steps to secure payment from consumers who are legally bound to pay or to repay money they owe. It is important that any organisation involved in recovering debt is aware of their legal obligations.
You should treat debtors and third parties fairly and with respect and courtesy. You should never harass or coerce them, treat them unconscionably or mislead them as to the nature of their debt, their legal obligations or any possible outcomes if the debt is not paid.
You should also not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.
Contacting a debtor
Communications with the debtor must always be for a reasonable purpose, and should only occur to the extent necessary. It may be necessary and reasonable for you to contact a debtor to:
- give information about the debtor’s account
- convey a demand for payment
- accurately explain the consequences of non-payment, including any legal remedies available to the collector/creditor, and any service restrictions that may apply in the case of utilities (for example, electricity)
- make arrangements for repayment of a debt
- put a settlement proposal or alternative payment arrangement to the debtor
- review existing arrangements after an agreed period
- ascertain why earlier attempts to contact the debtor have not been responded to within a reasonable period, if this is the case
- ascertain why an agreed repayment arrangement has not been complied with, if this is the case
- investigate whether the debtor has changed their residential location without informing you, when there are grounds for believing this has occurred
- sight, inspect or recover a security interest
or for other similar purposes. You may also contact a debtor at the debtor’s request. However, it is not reasonable or acceptable to contact a debtor to:
- righten or intimidate the debtor
- demoralise, or exhaust the debtor
- embarrass the debtor in front of other people
or for other similar purposes.
Other questions relating to Debt collection practices
• ACCC-ASIC debt collection guideline: for collectors and creditors
• Relevant Commonwealth consumer protection laws
• Prohibition of the use of physical force, undue harassment and coercion
• Prohibition of misleading and deceptive conduct
• Prohibition of unconscionable conduct