• Federal

COVID-19 has impacted people financially across Australia. If you fall behind in your financial commitments, it can be overwhelming when a debt collector contacts you about a debt. But you can take some steps yourself to find out your options, protect your position, and deal with debt collection in a proactive and less stressful way.   

This resource is written for people who are dealing with debt collectors, and contains information about:  

  • What happens if a debt is sent to a debt collector

  • How to deal with a debt collector 

  • What debt collectors can and cannot do 

  • What you could do if you have a dispute with a debt collector 

What happens if my debt is sent to a debt collector?  

Debt collectors can either contact you on behalf of your original creditor (as agent), or on their own behalf if your original creditor ‘sold’ the debt to debt collector (as assignee). To find out which type of debt collector you are dealing with, you can simply ask the debt collector or check the letter you received from the debt collector. If the debt was sold to the debt collector, the letter will refer to the assignmentof your debt. 

If a debt collector is contacting you on behalf of a creditor, the creditor is responsible for the actions of the debt collector and you can still contact the creditor directly – for example, to negotiate, raise a dispute, or ask for information or documents  

If your debt was sold (assigned) to a debt collector, this simply means that your original creditor gave their right to recover the money to the debt collector. In that case, you no longer owe the original creditor any money and you need to engage directly with the debt collector instead.  

Either way, debt collectors must follow the rules when trying to recover money from you. You have all the same legal rights, no matter who has the right to recover the debt. For example, debt collectors are not allowed to bully, intimidate or harass you. We have included more information about what debt collectors can and cannot do below.  

What should I do if my debt has been sold to a debt collector?  

There are a few key things you can do if your debt has been sold to a debt collector:  

1. Confirm whether you owe all the money

Read the letter from the debt collector carefully, especially if you have more than one debt. The letter should tell you specifically which debt was sold to the debt collector and what amount is owed. Sometimes mistakes are made. Before you consider options to repay the debt, make sure you owe all the money charged (including interest and fees).   

If you think there is a problem, you can ask the debt collector for more information and to give you copies of all relevant documents so that you can get advice. You can also ask for a statement setting out how the debt (including interest) was calculated and showing all payments that you made 

Ignoring the problem will not make it go away. Get legal advice straight away if: 

  • you received a notice about being taken to court 

  • the debt is not yours (or all yours), or you were victim of fraud or identify theft 

  • you think the debt collector is harassing you or doing something illegal 

  • your debt is old (close to 6 years or more since your last repayment), because in some cases old debts cannot be enforced  

2. Assess your finances and be open about your position

If you are sure that you owe the debt, figure out how much of the debt you can pay off, if any. If you don’t fully understand your financial position or know where to start, you can call the National Debt Helpline on 1800 007 007 for free financial counselling.   

If you can’t pay the full debt off right now, you can write to the debt collector to explain your circumstances. You can ask for a payment plan, so that you can pay the debt off slowly over time. You can also ask for the debt to be waived, or put on hold for a while with no fees or interest, if you are going through extreme hardship – for example: 

  • if you know will not be able to afford repayments in the future 

  • if you don’t have any significant assets that you could sell to repay the debt 

  • if you have a chronic or terminal illness 

Once the debt collector knows about your circumstances, they may choose to:  

  • set up a payment plan 

  • reduce the amount you owe  

  • waive the entire debt, or 

  • refuse your request and take legal action in court 

You might be upset and frustrated, but aggressive or unreasonable communication will not help you reach a resolution. Focus on the facts and maintain an open dialogue with the debt collector.  

If negotiations are failing and the debt collector tells you they will take you to court, get legal advice to understand your options. Make sure you reply to calls or letters and tell the debt collector if your contact details change, to ensure that you know about any court action taken against you. 

3. Keep good records

In all situations, keep comprehensive records of all your communication with the debt collector. This could be as simple as following up on a phone call with an email to confirm what you discussed, writing notes down in a notebook or keeping records of emails and phone conversations.  

Your records should include the dates and times that the debt collector contacts you (especially if they are contacting you excessively). You should also record the method the debt collector used to contact you and what you said to one another. 

If you come to an agreement, make sure you confirm that agreement in writing. You can write to the debt collector yourself to do that. You don’t have to wait for the debt collector to write to you to confirm the agreement.   

What debt collectors can do

There are certain things a debt collector can do, for example: 

  • Contact you to ask for payment 

  • Offer a payment plan or to settle a dispute 

  • Tell you about the consequences of not paying the debt 

  • Take legal action in court to repossess goods that you owe money on 

A debt collector may commence bankruptcy proceedings against you to try and recover the debt. If you received documents that are titled “bankruptcy notice” or “creditor’s petition” and want to know what they mean, take a look at our bankruptcy resources.

What debt collectors cannot do

Your rights don’t disappear just because you owe money to a debt collector. Debt collectors must still respect your privacy, and follow certain rules about when and how they can contact you: 

  • By phone: debt collectors cannot call you more than 3 times a week or 10 times a month, and never on national public holidays.  

  • Email and social media: they can only contact you on email or social media if they are reasonably sure that only you can read the messages. For example, if you have a shared email account at work, they would not be able to email that address.  

  • Face to face: debt collectors can only approach you face to face as a last option if you don’t respond to phone calls or other contact attempts. 

Debt collectors cannot do any of the following things: 

  • Trespass on your (or your family’s) property. 

  • Harass or intimidate you or your family by contacting you at unreasonable times or contacting you more than necessary. 

  • Use abusive language towards you or your family.  

  • Mislead or take unfair advantage of you or your family to get you to repay the debt – for example, by taking unfair advantage because of a disability or lack of understanding. 

  • Talk to someone else about your debt, unless you have agreed to it. 

What should I do if I have a dispute with a debt collector?

There are a few things you can do if you have a dispute with a debt collector or think they are doing something illegal:  

  • If you are being harassed or intimidated, write a letter to the debt collector asking them to stop. You can use the sample letter generator from the Financial Rights Law Centre to create a letter you can send. This is a sample letter generator that is available for you to use.

  • You can contact the Australian Financial Complaints Authority (AFCA) to make a complaint and access free and independent dispute resolution services. You can read more information on our resource ‘Resolving a problem with your bank at the Australian Financial Complaints Authority‘.

  • If a debt collector threatens you with violence or trespasses on your property and doesn’t leave when you ask, you can call the police. 

  • If you think there are any issues with the debt or if you receive a notice about being taken to court, ask the debt collector to give you some time to get free advice. Find a free financial counsellor

Extra Resources

Financial supports

Temporary supports are available to help people affected by COVID 19, including:  

  • JobSeeker payments 

  • Early access to superannuation 

  • Rent assistance 

  • Renegotiation of mortgage  

These resources contain information about steps you could could take if you lose your income because of COVID-19:  


More self-help resources

  This resource was last updated on 30 October 2020. This is legal information only and does not constitute legal advice. You should always contact a lawyer for advice specific to your situation. Please view our disclaimer for more information.

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