Key Points
- Debt collectors in Australia must follow strict rules set by ASIC and ACCC.
- If you’re overwhelmed by debt, consult a financial counsellor to explore options like debt consolidation or negotiating more manageable repayment terms with creditors.
- Ignoring the debt may lead to more serious consequences, including legal action.
A debt collector in Australia is an individual or agency employed by a creditor such as a bank, utility company, or lender to recover outstanding debts from individuals or businesses. Debt collectors must adhere to strict guidelines set by the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC). These regulations are designed to protect consumers from harassment or intimidation. Debt collectors are prohibited from contacting you during unreasonable hours—specifically before 8 a.m. or after 9 p.m.
If you feel a debt collector is acting unfairly or inappropriately, you have the right to lodge a complaint with the Australian Financial Complaints Authority (AFCA).
Dr. Jaime Lopez, a certified accountant, academic, and debt collector, emphasised that if you're unable to pay the full amount, you can often negotiate a payment plan with the creditor.
Many debt collectors are willing to work out a manageable arrangement, such as smaller, regular payments over time. The key is to only agree to terms you can realistically affordDr. Jaime Lopez
It’s also crucial to respond promptly if you are contacted by a debt collector. Ignoring the issue can lead to more severe consequences, such as legal action or additional penalties. If you feel uncomfortable with phone calls, you can request that the debt collector communicate with you in writing, giving you time to carefully review the details of the debt.
Dr. Lopez also shared valuable financial advice to help prevent future debt issues. "To avoid falling into debt, it’s important to proactively manage your finances. Track your income and expenses to ensure you live within your means. A simple budget can help you avoid overspending and save for emergencies," he said.
He also recommended making regular payments on loans and credit cards to avoid late fees and escalating interest charges. "If you’re struggling, it’s crucial to reach out to your creditors early to discuss payment options. The sooner you address the situation, the better," Dr. Lopez advised.
For those facing overwhelming debt, Dr. Lopez suggested consulting a financial counsellor. "They can help assess your situation and explore options like debt consolidation or negotiating with creditors for a more manageable repayment plan," he added.
By taking proactive steps, such as budgeting, seeking help when needed, and negotiating with creditors, you can better manage debt and work towards achieving financial stability.
