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SCORE DEBT COLLECTION BULLETIN #4

DEBT COLLECTION GUIDELINES ISSUED BY ASIC & ACCC

Australian Securities & Investments Commission (ASIC) and Australian Competition & Consumer Commission (ACCC) have issued guidelines for both debt collectors and creditors regarding acceptable processes in debt recovery. Score Debt Management operates under these guidelines which were developed with particular reference to collecting from individual debtors but when relevant can be equally interpreted to the collection of corporate or business debts.

The guidelines apply to creditors and debt collectors. When a creditor uses a debt collector it is possible that the creditor (as principal) will generally be liable for the debt collection agencies conduct. As such all creditors should ensure that they use a licensed and reputable collection agency that works within these guidelines.

The information below is only an assessment of these guidelines and should not be relied upon exclusively.

Full guidelines can be found here

DEBTORS RESPONSIBILITIES

  • To pay the debts they legitimately owe
  • To not avoid their obligations
  • To contact the creditor or debt collector to advise them of current financial circumstances and to where possible pay the debt even if by instalments. Debtors are to be candid about their financial position including other debts they may have
  • If necessary to seek a financial counsellor, solicitor or other qualified adviser to assist them
  • To not abuse or harass and debt collectors

ASIC and ACCC have also issued a publication “Dealing with debt: Your rights and responsibilities” that gives consumers detailed advice.

CREDITORS AND DEBT COLLECTORS RESPONSIBILITIES

  • Must not threaten action (legal or otherwise) that they are not legally permitted to take, or do not have instructions or authority to take.
  • Make reasonable allowances for the debtor’s financial circumstances when considering capacity to pay even if by instalments.
  • To be bound by all aspects of the Privacy Act

To communicate with a debtor for the following purposes

  • Provide information on; and demand for payment
  • To accurately explain the consequences of non payment including any legal remedies available
  • To make arrangements for repayment or to put alternatives to a debtor
  • To review arrangements after an agreed period
  • To ascertain why a debtor has not responded within a reasonable time frame
  • To ascertain why an agreed repayment plan has not been adhered to
  • To investigate any change of address where there are grounds to believe this has occurred
  • To sight, inspect or recover a security interest

It is NOT acceptable for a creditor or debt collectors to

  • Frighten or intimidate a debtor
  • Demoralise or exhaust a debtor
  • Embarrass a debtor in front of others

CONTACT WITH A DEBTOR

A creditor or debt recovery agent must

  • Firstly ensure that you are talking with the debtor personally before any information or comment is made. The Privacy Act must be obeyed at all times.
  • Not disclose information regarding the details or existence of a debt to any other party including a debtors spouse
  • Not misrepresent who they are or work for; or mislead the debtor in any other way.
  • Provide relevant information to the debtor pertaining to the debt and provide further information or documentation as might be requested
  • If the debtor denies or disputes the debt then that denial or dispute must be fully investigated and a response provided that proves the creditors debt or provides alternative remedy to the dispute or options for a reduced settlement. Collection action cannot continue until this has occurred. Further communication may be possible however to state or re-iterate the basis of the claim; to advise the debtor of your intentions to issue legal action; or to put a genuine offer of settlement. (If a court judgment exists then this can be executed if the debtor has a dispute, providing that judgment has not been set aside by the court)
  • Enter into an instalment program with a debtor after consideration of the debtor’s financial circumstances when a debt cannot be paid in full. The instalment amounts must be a true reflection of the debtor’s capacity to repay and pressure cannot be asserted to make them pay unreasonably high instalments. Instalment programs should be confirmed in writing
  • Always use the telephone or mail for contact unless this is not possible or such contact is being ignored by the debtor. If a debtor instructs that contact not be made in a certain way they must provide an alternative method. In usual circumstances relating to consumer debt the debtors home is the preferred contact point (The workplace is fine if the debt is of a commercial or business nature and the debtor conducts the business)
  • Unnecessary or unduly frequent contacts maybe considered to be harassment. The guidelines recommend no more than 3 contacts weekly or 10 times monthly (where contact is made). Contacts are considered as letters or telephone calls. Contact by email or SMS is to be used only when considered necessary or reasonable. At all times a necessary interval must occur between each contact to allow for response.
  • If a debtor is represented by a solicitor or third party then contact should be with the appointed representative. A spouse or other party may only be contacted if the debtor has provided a written approval for that contact. In this instance you can only contact the debtor if the representative does not respond in an appropriate time frame (usually 14 days) or if they advise they have no instructions relating to the debt.
  • Do not suggest that the debtor must prove their claims. The onus of proof at all times is vested with the creditor.

HOURS OF CONTACT (Recommendations)

By Telephone

  • Mon – Fri 7.30am to 9.00pm
  • Weekends 9.00am to 9.00pm
  • Public Holidays No Contact

Face to Face – by appointment wherever possible. If requested to leave you must do so immediately.

  • Mon – Fri 9.00am to 9.00pm
  • Weekends 9.00am to 9.00pm
  • Public holidays No Contact

Debtors Workplace – as a last resort if the debt is consumer debt unless the debtor is the proprietor or director of the business; or they have specifically agreed.

  • Debtors normal hours of work if known or 9.00am to 5.00pm on workdays

Creditors should not rely exclusively on this bulletin. You should download and read the entire documents released by ASIC and ACCC. Again these are available from the following link: http://www.accc.gov.au/content/index.phtml/itemId/733222 or you can email us at [email protected] and we will forward you a copy.