Debt collectors have strict rules on how they can treat debtors

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RACKING up debt is easy. Paying it off can be a little trickier. Trickier still can be negotiating your way out of trouble if you fall behind in your payments.

When your bills turn red and scream words like ‘final demand’ then you’re only days away from being added to a debt collector’s hit-list.

The thought of a bunch of heavies turning up in the middle of the night to repossess your plasma TV is scary, and not necessarily accurate.

In fact, you’re more likely to get a polite phone call from a mild-mannered, office-bound debt collector in the first instance.

An employee at credit agency Dun & Bradstreet says debt collectors arenít “out to get” debtors.

“We’re not monsters, weíre just doing our job.”

Debt collectors would like to be thought of as ‘reminder services’, making sure people stick to their obligations.

Christine Christian, chief executive at Dun & Bradstreet says debt collectors are an important cog in the economyís wheel, because they make sure businesses get paid.

“Collection agencies are integral to the economy,” said Ms Christian

Many collectors not only help to retrieve accounts payable but also guide their clients when it comes to making better business decisions.

“We take our purpose very seriously,” Ms Christian said.

Don’t be bullied

But there are plenty of people out there who have had bad experiences with debt collectors.

“In our experience debt collectors are often aggressive and rude. Not surprisingly debtors just want to get off the phone and agree to make repayments which they can’t afford” said Jan Pentland from the Australian Financial Counselling and Credit Reform Association.

The Australian Securities and Investment Commission have strict guidelines around debt recovery.

According to ASIC, a collection agency should not contact a debtor more than three times per week, or 10 times a month at most.

This contact includes both speaking on the telephone and letters sent out to the debtor.

Many credit agencies aim to follow these guidelines, however some can resort to forceful methods to get debtors to pay.

GE Money was forced to compensate some of its customers earlier this year after its debt collection staff resorted to unreasonable tactics to get customers to pay up.

“Debt collectors are not well trained if at all. They have little if any training on what the legalities of debt collection, and there is a large turn over in staff – not surprisingly,” says Ms Pentland.

Know your rights

Knowing your rights may be the key to getting the best deal when it comes to settling debt.

“It’s important consumers know when they’re being bullied,” says Carolyn Bond co-chief executive officer of the Consumer Action Law centre.

Paying debt as soon as possible is the way to avoid getting into trouble, Ms Bond says.

But if you can’t pay the debt, it’s best to admit this upfront so you can come to some kind of arrangement with your creditor.

“We’re always willing to arrange a payment plan if it means getting the debt paid eventually,” says one D&B employee.

Avoiding the debt collector’s call could only land you in a worse situation and could be the worst thing you could do.

“Normally we aim for a 21 day turn around, once the debt is referred to us,” says Ms Hurley.

“After this period legal action is often taken depending on the size of the debt,” she said.

Piling up debt

Coming under the scrutiny of a credit agency could be as easy as falling behind in your household bills. If your name is on a utility bill make sure that bill is being paid ñ especially if you’re living with other people.

Dun & Bradstreet research shows that 8 per cent of Australians expect to fall behind in their bill repayments in the next few months.

As well as bills, there are a whole host of consumer debt that can get you into trouble – like in-store finance deals (the buy now, pay later kind), or the short-term “payday” loans taken out to survive between pays, or any other easy credit.

And then there’s credit cards. Australians racked up $44 billion of credit card debt over the past year.

A survey conducted by earlier this year revealed 45 per cent of borrowers were struggling to pay debts, with 10 per cent often late on loan repayments.

If you do fall behind in your repayments don’t ignore it ñ it won’t go away. Ring your utility provider/credit card company/creditor and explain your situation.

You might be able to negotiate a repayment plan before debt collectors are called in.

We help Australians get out of debt! If you are struggling with debt, don’t delay and call us toll free on 1800 98 10 70.

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