The generosity of creditors sparked by COVID-19 is coming to an end. Major creditors, including the ATO, continue to aggressively ramp up their collection efforts to get back what’s owed to them.
If you’re in a debt spiral like many Australians right now and have failed to pay your dues to date, you’re probably feeling the pressure. Especially if you have debt collectors on your back and the phone won’t stop ringing.
We know just how stressful this can be. You feel like you’re being backed into a corner and as if there’s no way out other than losing your home or other valuable assets. However, we’re here to reassure you, that this isn’t the case.
While ideally, you don’t want to get to this point, there are options for dealing with unpaid debt and those dreaded debt collector calls that can instead, result in a positive outcome.
Debt collection is legal here in Australia.
As a debtor (the person who owes money to a creditor), you’re legally responsible for paying debts you legitimately owe. However, a creditor (the person or organisation you own money to) should never harass you into paying.
Several Commonwealth consumer laws are relevant to debt collection, and between them lay out what debt collectors can and can’t do. These laws include:
Other laws relevant to debt collection include Commonwealth privacy laws, state and territory fair trading laws, and the Bankruptcy Act 1966.
As laws can be complex, we’ve summarised what debt collectors can and can’t do when it comes to recovering unpaid debt below, so you know your rights. There are serious penalties for debt collectors who don’t follow this guidance.
If a creditor or debt collector is not following any of the above guidance, you should seek legal advice right away. You can also contact the Australian Securities and Investments Commission (ASIC or the Australian Competition and Consumer Commission (ACCC) to report it.
If they’re following the rules and you can’t afford to make payments, don’t stick your head in the sand.
While it may be tempting to ignore the phone or emails in the hope they’ll leave you alone, doing this can have significant consequences.
These consequences include:
While it may seem daunting, especially if your mental health has already been affected by the stress, facing the problem head-on is always the best approach.
When the debt collector calls, letters or emails come, answer and/or respond to them, making sure you’re being cooperative and following the law.
Always be honest with them about your financial situation. Most will be understanding and offer options and plans for repayment. This includes the ATO, who offers repayment plans to help you manage your tax debt.
At the same time, seek expert financial counselling and advice. Our finance and legal specialists can:
If you have many creditors and owe a lot of money, we can also help you work out if bankruptcy may be the best option for your situation.
If you believe you’re being chased for a debt that isn’t yours or disagree about the amount owed, your first action should be to let the debt collector know. Also, ask them to provide the following:
We know from experience that dealing with debt collectors and creditors can be extremely stressful, especially if you don’t know your rights. But by engaging with them, being honest and seeking help straight away, you can wave goodbye to those debt collector calls and say hello to a brighter financial future.
Does your personal debt have debt collectors on your back? Get in touch with our team of debt solution specialists today on 1800 534 534 for professional, non-judgemental support and advice.