Debt Collection in Australia

The following are the main steps in debt collection procedures: 

 

1. first notification - this is the first step in collecting debts when the creditor sends the invoice and all of the information needed so that the payment can be made and it can be followed up by a confirmation of invoice receipt;
2. reminder - many debtors will need one or more reminders after the invoice has been issued and the creditor can use a friendly reminder by e-mail or telephone;
3. late payment inquiry - after the due date has passed, the creditor can inquire about the motives for the late payment and if this is an unusual situation with a long-standing client, this is a good time to solve the issue and perhaps work through a payment plan;
4. final notification - if no special situation is in place and the client continues to postpone the payment even after repeated reminders, then the creditor can send a final notice informing that legal action will be commenced;
5. judicial recovery - our team can help you commence the litigation phase when all previous attempts to collect the debt have failed.

 

Debt collection is done through debt collection agencies or through other entities that have expertise over debt collection procedures, such as our law firm in Australia. 

 

Commonly, persons who carry out debt collection activities are known as debt collectors. Debt collectors have a set of responsibilities and obligations and provided that if a debt collector surpassed his or her responsibilities, the debtor has the right to take a legal action against the respective person. 

 

In Australia, debt collectors can be reported to the local institutions for inappropriate behavior, which can take the form of harassment for example. 

 

Persons who have had a negative experience with a debt collector can address the respective issue to the Australian Competition and Consumer Commission (ACCC), in the case in which the debt collector did any of the following: 

 

 

There are other actions that enter into the category of illegal behavior and we invite you to address to our lawyers in Sydney if you need legal counselling regarding the possible legal actions one can take when situations like these occur. 

 

What is the law applied to debt collection procedures in Australia? 

• Limitation Act 2005 – it regulates the maximum period of time in which debt collection proceedings can be initiated;
• Fair Trading Act 2010 – the law is based on the main law, which is Trade Practices Act 1974;
• National Consumer Credit Protection Act 2009 – it regulates consumer credit transactions; 
• Unauthorised Documents Act 1961 – it forbids certain designs for letters of demand, as they do not have to be similar with documents issued by the competent courts;
• other regulations derive from the Privacy Act 1988 and the Bankruptcy Act 1966. 

1. persons who are considered prohibited persons for this activity, who engage in debt collection, can be charged with 2 years of prison or 240 penalty units;
2. where the prohibited person is a corporation, the penalty is of 1200 penalty units;
3. if a prohibited person received a permission for debt collection activities, then he or she must abide by the conditions of the Business Licensing Authority, as per the rules of the Section 50(3) - if not, this will result in 240 penalty points/2 years in prison/1200 penalty units for corporations;
4. debt collectors are not allowed to charge the debtor for the cost of the procedure – if this happens, then a penalty of 120 points is imposed;
5. causing harassment or distress to the debtor can result in a court procedure, where the debt collector can be required to pay $10,000.