Debt Collection – Seeking Compensation in VCAT

Use this factsheet if you:

  • are being hassled by a debt collector
  • think that a debt collector or a creditor might be acting unfairly or unlawfully
  • want to seek compensation for the distress of humiliation you have suffered as a result

Key message

You can seek compensation if you have suffered distress or humiliation as a result of a prohibited debt collection practice.  For more information on what might be considered prohibited debt collection conduct see our factsheet: Debt Collection – prohibited debt collection – I am being hassled by a debt collector and seek legal advice.

The Victorian Civil and Administrative Tribunal (VCAT) may award damages of up to $10,000 where a person has experienced humiliation or distress:

  • due to a course of conduct (conduct which occurs on at least two occasions);
  • in contravention of the prohibited debt collection practices within the meaning of section 45 of the Australian Consumer Law and Fair Trading Act 2012 (Vic); and
  • where the debt is a consumer debt (a debt which was incurred for personal, domestic or household purposes).

You may also be able to seek compensation for other breaches of the Australian Consumer Law.

Getting advice about your claim

Before making a complaint to VCAT you should make sure you have a reasonable claim and that you understand all of your rights. Contact Consumer Action for assistance.

If your debt relates to a credit contract or lease, consider making a complaint through the Financial Ombudsman Service or the Credit and Investments Ombudsman before taking action in VCAT (see our Debt Collection – seeking compensation in relation to consumer credit and leases).

If you have suffered a significant injury consult a personal injury lawyer as soon as possible.

How do I claim compensation in VCAT for humiliation and distress caused during debt collection? 

Step 1:  Send a letter to the debt collector or creditor demanding compensation (for sample letter click:  Seeking Compensation in VCAT sample letter). Always send a copy of you complaint to the Regulators (ASIC, ACCC or Consumer Affairs) to alert them to any unlawful debt collection practices that you have experienced.

Step 2:    Lodge your complaint with VCAT. For information about how to make a complaint to VCAT, see our factsheet Dispute Resolution: Consumer Disputes in VCAT. Seek help if you do not understand something, or you are concerned about having to deal directly with the debt collectors again.

What to expect at VCAT

At VCAT, different members will have different approaches about how to resolve an issue.

A Member may decide that a settlement will be best in your case. They may strongly encourage you to negotiate with the other side. If you have already done this many times before, and the other side hasn’t responded, try not to feel pressured to settle. You can always tell the Member this – that you have tried to negotiate, that this has failed and that you are now here for the Member to make a decision.

Remember – you are there to tell your story, to let the Member know why the trader has breached the law, and to achieve a particular result.

You may have read that costs cannot be awarded by VCAT for ‘small claims’ (except on an application to reopen a claim).[i] This rule does not apply for cases where you claim compensation for distress or humiliation resulting from prohibited debt collection practices.[ii]

Further Information

Consumer Action Law Centre
Telephone: (03) 9629 6300, or 1800 466 477 for country or mobile phone callers.

If you are deaf or have a hearing or speech impairment, you can call through the National Relay Service (NRS):

  • TTY users can phone 133677 then ask for 1800 466 477
  • Speak & Listen (speech-to-speech) users can phone 1300 555 727 then ask for 1800 466 477
  • Internet relay users can connect to NRS on then ask for 1800 466 477

Victorian Civil & Administrative Tribunal (VCAT)
General tel: 9628 9700
Civil List ph: 9628 9830
Country callers: 1800 133 055

Warning: This fact sheet is for information only and should not be relied upon as legal advice. This information applies only in Victoria, Australia and was updated on 31 December 2015.

[i] Clauses 4I of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998

[ii] s 46(4) Australian Consumer Law and Fair Trading Act 2012 (Vic)


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