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5 things debt collectors wish you knew
People can fall into debt for any number of reasons, and while it’s not the best position to be in, it can happen to the best of us.
It can be a scary experience to be contacted by a debt collector, but it won’t help the situation to bury your head in the sand.
RateCity spoke to EC Credit Control Debt Collector, Chris Loveridge, about his experience chasing consumer and commercial debt, and what he wishes more people knew about his industry.
What is a debt collector?
A debt collector is someone who works on behalf of creditor clients to recover outstanding consumer and commercial debts.
In Australia, debt collection is regulated by both The Australian Competition & Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC). Both debtors and debt collectors have rights and obligations to ensure that deb collection activity is consistent with consumer protection laws.
Their work is not the most popular, and they are often criticised by those who may be uneducated about the debt collection process. However, it is important to keep in mind that debt collectors are working on behalf of creditors who have hired them to help recover outstanding payments.
What debt collectors wish you knew:
- They’re not restricted to phone calls
Don’t be shocked if you find a message in your Facebook inbox.
It is perfectly legal for modern day debt collection agencies to contact you in ways besides a phone call, such as social media.
“Modern debt collection agencies have little or no face to face contact with debtors, preferring to utilise contact technology options such as telephone, fax, mail, SMS and email to facilitate faster resolution,” said Mr Loveridge.
Reasonable contact times:
| Contact by telephone | Monday – Friday | 7:30am – 9pm |
|---|---|---|
| Weekends | 9am – 9pm | |
| National Public Holidays | No contact | |
| Face-to-face contact | Monday – Friday | 9am – 9pm |
| Weekends | 9am – 9pm | |
| National Public Holidays | No contact | |
| All workplace contact | Debtor’s normal working hours (if known), or 9am – 5pm on weekdays. | |
| Social media & email | Any time, however account cannot be shared with another person and message cannot be viewed by anyone besides debtor. |
- “How can I pay in full today?”
This is the ideal way to respond when a debt collector contacts you, according to Mr Loveridge.
“There is a small section in the ACCC Guidelines for collectors and creditors that covers a debtor’s responsibilities,” said Mr Loveridge.
The ACCC guidelines state that when debtors are legally responsible for paying the debts they legitimately owe, they should:
- Not attempt to avoid the obligation to satisfy debts they have incurred;
- Promptly contact creditors and debt collectors when they are experiencing financial difficulties and attempt to negotiate a variation in payments or other arrangement; and
- Be candid about their financial position, including any other debts.
- They can help with payment plans
Anyone can find themselves experiencing financial difficulties, and debt collectors understand this better than anyone.
“Debt collectors will most likely be prepared to negotiate a suitable payment plan to suit both debtor and creditor if it is clear the debtor is struggling financially. The debtor can also avail of local budgeting services to assist in meeting their financial obligations,” advised Mr Loveridge.
It is also not unusual for a debtor to dispute the debt in question, however you should be prepared to put this in writing.
“Whilst a debt can be verbally disputed, in written format there can be no ambiguity around what the dispute entails and it forms a clear trail should legal action ensue,” explained Mr Loveridge.
- They also want to avoid legal action
It’s not just debtors who are protected by laws and regulations. There are legal consequences to the debtor if non-payment occurs and the creditor holds a signed contract.
These include the withholding of further goods and services, as well as default listing the debtor with a credit reporting agency.
What is a default listing?
According to credit agency Equifax, if you miss a payment worth more than $150 and it is more than 60 days overdue this is listed as a default. A default remains on your credit report for five years.
But it’s important to keep in mind that both creditor and debt collector also want to avoid this process.
“Court action against the debtor is an action of last resort for the creditor,” said Mr Loveridge.
“[It] should not be dismissed by the debtor, and may result in bankruptcy or liquidation. In most cases, any legal action taken against the debtor will result in additional costs and interest being added to the claim.”
- Debt collectors are not to be feared
The most important thing to keep in mind if you’ve been contacted by a debt collector is that they’re here to assist you too.
“Whilst debt collectors are always acting on the instruction of their client and are seeking payment in full, there are obligations to also consider the debtors financial circumstances which may lead to a payment arrangement over an agreed period,” said Mr Loveridge.
“All good debt collectors will work with you to have a positive outcome but you should remember that it isn’t the debt collector who has put you in this situation.”
If you’re feeling too nervous to answer the phone, keep in mind that it’s important to not ignore an approach from a debt collector as this can be met with escalated action and an adversely impacted credit rating, bankruptcy or liquidation.
“Keep the communication lines open at all times,” added Mr Loveridge.
Disclaimer
This article is over two years old, last updated on September 18, 2017. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent savings accounts articles.
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