Calls about debt collectors are all too common at the National Debt Helpline.
People are often both stressed and distressed by their interaction with debt collectors, who are perceived as bullying and aggressive in their strategies to collect money.
Making these experiences worse is the fact that these upsetting interactions often relate to old, long-forgotten debts.
One lady I spoke to had just returned to Australia from a stint working overseas and was shocked to receive a call about an old electricity bill she thought had been paid years earlier.
Such stories are not unusual. As more and more of us regularly change our energy and phone providers, move houses and jobs and travel, bills naturally get missed.
And as companies increasingly pass on the task of collecting unpaid bills to debt collectors, this is an unpleasant interaction that many of us will unfortunately experience.
So, what should you do if a debt collector comes calling?
1. Check the debt is yours
Always ask for evidence of money owed before acknowledging it.
The debt collector should be able to give you a statement showing who the original creditor was, any interest charged and payments made to date so you can confirm whether the debt is, in fact, yours.
Even if you believe the debt is legitimately owed, do not under any circumstances make any payments or offer to make payments until you have confirmed that the amount owed is correct.
There are also limits on the length of time that a creditor can pursue you for a debt.
If it has been more than six years since you last paid or acknowledged the debt, it is possible that the debt is statute barred, meaning that it is too old to pursue. If you make a payment or acknowledge the debt, it could start the six years again, so be careful.
It’s best to seek advice from a financial counsellor or lawyer before you do anything.
2. Know your rights
The law protects you from unreasonable debt harassment.
Debt collectors can only contact you by phone between 7.30am and 9pm on weekdays, or between 9am and 9pm on weekends. Face-to-face contact can only be made between 9am and 9pm each day.
There are also limits on the number of times they can make contact: three calls, messages or letters a week or 10 a month are allowed. Unduly repeated contact designed to wear you down or exhaust you is not allowed.
Importantly, the debt collector does not have to speak to you directly to have made contact: if they leave a message on your voicemail, send you a text and contact you through Facebook, this is classed as three contacts.
Debt collectors can receive substantial fines for trespassing or for harassing, embarrassing or intimidating you.
If you think a debt collector’s behaviour is unreasonable, keep a record of all contact and make a complaint to the Australian Financial Complaints Authority (AFCA) or Consumer Affairs in your state.
3. Negotiate payment on your terms
It is usually possible to negotiate a payment plan or to offer a reduced lump sum to clear the debt.
Get any agreement from the debt collector in writing if you make an offer. If you are offering a payment plan, the MoneySmart website has a great budgeting tool to help you work out what you can afford to pay.
If you are satisfied that the debt is yours but are experiencing financial hardship or believe you have other grounds to dispute it, call the National Debt Helpline for advice.
It may be possible to negotiate a partial or complete debt waiver depending on the circumstances.
If the debt collector agrees not to pursue you for part of the debt, make sure the agreement states that they will waive the residual debt rather than write it off.