If your credit card balance has been transferred to a debt collector, it's important to know your rights. Our guide outlines what they can and can't do.
We've all missed the occasional payment, usually due to simple oversight. Mostly, these defaults are rectified once the vendor sends a reminder notice. But sometimes the debt remains unpaid and after following the normal recovery procedures (escalated reminder notices, threatening legal letters, listing with a credit agency such as Veda etc), the vendor may choose to sell their debt to a debt collector.
The debt collector, who has purchased the debt for a portion of its value, then begins their collection activities. Because the debt has been sold to them, any money they can collect (and they usually seek to recover the original debt amount plus fees for the collection) is theirs to keep.
Conversely, if they fail to collect the debt, they lose money on their purchase.
This can lead to some aggressive tactics employed by debt collectors, and regulators commonly handle complaints from consumers regarding the behaviours of credit collection agents. So what are they permitted to do, and what isn't acceptable?
The Fair Trading Act regulates the behaviour of debt collectors. It permits them to take "reasonable" steps to recover the debt, but explicitly forbids the following behaviours:
- Undue harassment or coercion, which includes threats, violence, verbal or physical abuse, intimidation and excessive phone calls or visits to your home.
- Threats of legal action or seizure of your assets.
- Attempts to seize your assets, unless they have a court order explicitly permitting them to do so (this is typically only granted in cases of mortgage default).
- Requests for your drivers licence number, bank account details or any other information of a personal nature.
- Use of a false name.
- Misrepresentation of the size of your debt.
Other things you should know:
- You are not legally obliged to allow a debt collector into your home.
- If you feel a debt collector has violated any of the above guidelines, you should make a complaint with the collection agency, seek legal action and/or contact the police.
- You should keep a log of all actions taken by the debt collector in case you need to later prove their misconduct.
- Before speaking with a debt collector, you should consider consulting a lawyer or financial counsellor.
