Dealing with debt collectors

A debt collector is someone who is paid to collect the money you owe. Your debt may have been sold to a third party or they may be working on behalf of the creditor.

What happens when a debt collector calls and you don’t respond?

  1. A debt collector will keep trying to contact you as it’s their job to try and recover a creditor’s money. This may add to your stress as you never know when they will call next.
  2. The creditor or collection agency may also commence legal action to recover the debt.
  3. If you move house without informing a creditor, they may place a listing on your credit file for the debt. This may affect your chances of getting loans or finance in the future.
  4. If the debt is large enough, you may be sequestered into bankruptcy without notification.
  5. Property such as your home or car may be at risk.


What options do you have?

In any financial matter, the best thing to do is to obtain support as soon as possible. You can contact the National Debt Helpline for free on 1800 007 007.

It’s important to check that the debt is your debt. If you are unsure, do not admit responsibility for the debt. It may be an old debt and nearing the end of its legal collection period, at which time it will become statute barred, and thus not recoverable. To find out more, speak to the National Debt Helpline on 1800 007 007.

Check if your debt is secured to any of your assets. If your debt is secured to your car or home, you may be at risk of losing them.

Create a budget to work out a realistic plan to pay off the debt. A financial counsellor can help you do this for free. You can contact the National Debt Helpline for more information on 1800 007 007.


What to do when a debt collector calls

  • Only return the calls if you know the debt is yours.

  • If your loan is secured, your property may be at risk. Seek legal advice urgently.

  • If you are the guarantor for the debt, you may have the same legal responsibility as the borrower.

  • If you have contacted the creditor in writing or made a payment within the last five or more years, then you are liable for the debt.


How to pay back the debt if you can’t afford it

  1. Create a budget to find out your capacity to pay. Do not agree to something you cannot afford.
  2. Contact the collections agency and discuss a payment plan. Ask for more time so that you can contact a financial counsellor for support.
  3. If you have a car and are worried it may be repossessed, keep it in a secure place until the payment plan is arranged. It is much harder to remove your car from your property than from the street.
  4. You can try to return the goods (white goods, car etc.). However, you will still be responsible for any remaining debt.
  5. If you wish to offer to repay an amount, say the following to the collection agency: “Unfortunately, after paying my basic living expenses I will only have $... [a certain amount of money left over] to offer you each fortnight. I cannot afford to pay more. I realise the consequences may be a listing on my credit file and that you have the right to commence legal action. I will contact you when my situation changes.”
  6. If you are unable to pay anything, say the following to the collection agency: “Thank you for calling. My financial position has not changed. After paying my basic living expenses I do not have anything left to make payments to this account. I cannot afford to pay and I will contact you if my financial situation changes.”


Take action before your debt goes to a collection agency

  1. Contact your creditor as soon as you know you cannot pay your debt. Remember, they can’t help you if they aren’t aware of your situation.
  2. Ask for reduced payments, reduced interest or additional time to pay due to financial hardship. Legally, creditors must consider your request.
  3. If possible, return the assets if you can no longer make the repayments. Although you will still be responsible for the balance of the debt, it may be less if the asset has been returned or sold.
  4. Have a solution in place when the creditors contact you.


Separating fact from fiction

  • Your wages cannot be garnished or committed to repayments without a legal process being followed. If an order is placed by the court on your income, creditors cannot legally take more than 25%.

  • Your government benefits/allowances cannot be seized by a creditor/collection agency as this is against the Social Security Act 1991 Rules 855 (1) of the Queensland Civil Rules.

  • Your household goods cannot be seized in Queensland under the Civil Rules (Rule 828). No one can enter your home without a court order, which would be the result of a lengthy legal process.

  • Goods cannot be seized by creditors unless the debt is secured against the asset, such as a car, home, land, white goods, electronics etc. However, unsecured goods can be seized by creditors in some circumstances. For example, when they have obtained a warrant for the seizure or sale of your property.

  • Non-payment of a debt is not a criminal offence, so you cannot go to jail. The exception would be use of a dishonoured cheque which has been dishonoured twice. A warrant for your arrest can be issued (after a lengthy legal process) for fines owed to the State Penalties Enforcement Register.

Know your rights

Contact by debt collectors
Debt collectors cannot contact you more than 3 times a week by phone and they cannot contact you more than 10 times in any month.
Visits home or at work
They can only visit you at home or work if there is no other way to contact you. They must not enter your workplace if you have asked them not to.
Visits In person
They cannot make face-to-face contact with you more than once a fortnight.
Your privacy rights
Debt collectors cannot discuss your finances in front of your co-workers or anyone else.
What are statute barred debts?
After 6 years, if there has been no payment made or action taken by the debtor or creditor, the debt cannot be pursued.

Additional information

women meeting with finance councillor
Looking for guidance?
Contact us today to organise a meeting with one of our financial counsellors.

Related articles

Keeping the power on

If you cannot pay your electricity bill, contact your energy provider as soon as possible – they may be able to come to an arrangement.

Learn more
Preparing for your first appointment

The more information you can share with your financial counsellor, the better their understanding of your situation. Here's what to consider.

Learn more