Tips for consumers hit with a debt collection notice
This year has been a perfect storm for financial stress.
As financial stress continues to rise in Australia, a growing number of consumers are finding themselves overwhelmed by debt. The number of people contacting the National Debt Helpline has surged by 12 percent, with an additional 20,000 individuals seeking debt advice in the year to August, bringing the total to 187,905. Of these, about 15,000 were directly related to debt collection.
Experts warn that debt collectors are increasingly using artificial intelligence to pressure debt-ridden consumers. One woman, for example, received repeated legal threats for a claim she was never liable for, which legal experts deemed a form of bullying. The Australian Competition and Consumer Commission (ACCC) is taking action against ARMA Group and Force Legal, alleging they sent 320,000 misleading debt enforcement notices.
If you receive a debt collection notice, the National Debt Helpline coordinator, Vicki Staff, advises first determining if the debt is valid. If you believe the debt is already paid or is statute-barred (three years in the Northern Territory, six years elsewhere), you may be able to challenge it. To do so, write to the debt collector, providing any evidence of repayment and citing the statute of limitations.
If the debt is valid, crunch the numbers to determine a realistic repayment plan. Obtain an agreement from the debt collector for an affordable payment arrangement. If you're unhappy with the process, you can check if the debt collector is registered with an external ombudsman and make a complaint. The Australian Financial Complaints Authority (AFCA) is another avenue for lodging a complaint, especially if the creditor is a financial services provider.
Debt collectors must adhere to Australian consumer law, which includes prohibitions against misleading and deceptive conduct. If a debt collector does not act appropriately, there may be consequences. Financial services providers should have an internal dispute resolution process for consumers to seek resolution.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
