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What do I do if I am being hassled by a Debt Collector?

1. Establish a plan for dealing with the debt;
2. Stop any harassment by the creditor or debt collector;
3. Seek compensation for any distress or inconvenience caused by any harassment by the creditor or debt collector.

If you haven’t done so already, you need to work out a plan for dealing with the alleged debt which is being claimed.  Even if you are treated unfairly by a debt collector, this does not mean that you do not have to pay money that you owe.  Refer to our fact sheet ‘Debt Collection: What can I do if a debt collector calls’ for more information.

What are my rights?

Whether or not you owe the alleged debt, you have rights to complain about unlawful or unfair conduct and the right to:

• have another person represent you, for example, a financial counsellor or lawyer;
• ask the debt collector to take court action instead of contacting you;
• ask the debt collector not to contact you at a particular place (e.g. your work), however, you must give alternative contact details, and
• have the debt collector send you information and documents relating to the alleged debt (not in all cases).

Remember you don’t have to answer any questions from a debt collector.

What debt collector behaviour is unlawful?

Even if you have a legal obligation to pay a debt – that doesn’t give a debt collector or a creditor the right to do anything they want to make you pay. If you owe money, you have rights – there are laws controlling the behaviour of debt collectors and lenders. They do not have the same powers as police officers or court sheriffs.

Certain behaviour by debt collectors is unlawful, including:

• misleading you about what action the debt collector can take, or about the debt (for example telling you there is court judgment against you when there isn’t);
• sending you a summons (court complaint) that has not been issued by a court;
• contacting you by a method that you have asked not to be used unless there is no other method available;
• using or sending you any document that looks like a court or tribunal document;
• disclosing information about the debt to other people without your consent;
• refusing to leave your home or workplace when you ask;
• using physical force; and
• unduly harassing or coercing you.

How do I know if the debt collector’s acts are unlawful?

ASIC and the ACCC have developed a Debt collection guideline: for collectors and creditors that sets out what debt collectors and creditors should and should not do in order to minimise the risk of them breaching the law. In some circumstances, these guidelines are binding on a creditor or debt collector.

In Victoria, certain debt collection practices are prohibited by section 45 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

It is not always easy to determine whether the debt collector is behaving unlawfully. If you are feeling pressured or stressed by a debt collector, contact the Consumer Action Law Centre’s free consumer advice line for further information or advice.

What can I do to stop harassment or unfair conduct?

Step 1: Keep detailed records of what the debt collector is doing.

Step 2: Take action – write to the debt collector, complain to an External Dispute Resolution scheme (Ombudsman Service) or VCAT.

Step 3: Complain to a Regulator.

Keeping records

Keep detailed written records of what is happening – note down the name of any person you speak to, the date and the time, a brief description of what happened and the names of any witnesses.  Keep all communications including letters and text messages.

Writing to the Debt Collector

Write to the debt collector and demand that they stop the harassment or unfair conduct (see our sample letter below). You can request that the debt collector not contact you in a specific way, such as by phone.

Keep a copy of any letter you send. You can also contact the police if you feel physically threatened.

Making a Complaint to an Ombudsman Service

If the debt collector continues its unreasonable conduct and the dispute relates to a credit, telecommunications, energy or water company, you can make a complaint to the  Ombudsman Service to which the debt collector or the creditor belongs, such as:

• the Financial Ombudsman Service
• the Credit and Investments Ombudsman
• the Telecommunications Industry Ombudsman or
• the Energy and Water Ombudsman Victoria

It is important to send a copy of your complaint to the debt collector and/or creditor.

The Victorian Civil and Administrative Tribunal (VCAT)

If the debt collector or creditor is not a member of an Ombudsman Service you should seek advice about making a complaint to VCAT.

See our fact sheets:

• Dispute Resolution: Consumer Disputes in VCAT
• Debt Collection – Seeking Compensation in VCAT

National Regulators

You should also complain to ASIC for debts relating to loans or financial services (e.g. insurance), and the ACCC for debts you owe in relation to products or other services you have bought (see details below).

The role of these government agencies is to “police” the practices of the industry. These regulators do not have consumer dispute resolution functions, they do not conciliate or advocate for individual consumers.

A complaint to a regulator will help the regulator monitor industry practices and, if there are a number of similar complaints, it might be used to take enforcement action against the creditor or debt collector.

The Victorian Regulator

Consumer Affairs Victoria (CAV) is a government department and can assist by:

• providing information;
• conciliating with creditors; or
• using some complaints about prosecutions and other enforcement action against traders.

Can I claim compensation if I have experienced harassment and unfair debt collection practices?

In some circumstances, you can claim any financial loss (such as lost wages), or non-financial loss (such as distress, inconvenience or humiliation) you have suffered if a creditor or debt collector engages in harassment, prohibited debt collection practices or other unlawful debt collection practices.

If your dispute relates to a credit or debt (such as a credit card, home loan, personal loan etc) both the Financial Ombudsman Service and Credit Ombudsman Service can award compensation for non-financial loss, including distress and inconvenience. The Financial Ombudsman service limits the amount of compensation for non-financial loss to $3,000.  The Credit Ombudsman has not set any specific limits on when such damages will be awarded.

See our factsheet: Debt Collection – seeking compensation in relation to consumer credit and lease contracts

The Telecommunications Industry Ombudsman only allows you to seek compensation for financial loss and does not allow you to claim compensation for non-financial loss.

Alternatively, you could consider making a complaint to VCAT, which has the power to award up to $10,000 compensation if you can prove that you have suffered humiliation or distress as a result of a course of conduct that is a prohibited debt collection practice.  It is advisable that you get legal advice from Consumer Action Law Centre before you complain to VCAT.

Sample letter – lodging a complaint against a debt collector

Click here for a sample letter showing how to make a complaint against a debt collector.

Free Advice & Assistance

Consumer Action Law Centre
Legal Advice Line
Telephone: (03) 9629 6300, or 1800 466 477 for country callers.
Email: advice@consumeraction.org.au

Consumer Affairs Victoria
Ph: 1300 55 81 81
www.consumer.vic.gov.au

Victoria Legal Aid
Ph: (03) 9269 0234, or 1800 677 402 for country callers.
www.legalaid.vic.gov.au

Federation of Community Legal Centres
Ph: 9652 1500
www.communitylaw.org.au

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