Debt Recovery Law & Lawyers

Debt Recovery Law & Lawyers News

NEWS, UPDATES & ALERTS - Debt Recovery Law & Lawyers:

Debt collection practices

What can I do to pursue a debt?

Debt collection is a legitimate and necessary business activity where creditors and collectors are able to take reasonable steps to secure payment from consumers or businesses who are legally bound to pay or to repay money they owe. It is important that any organisation involved in recovering debt is aware of their legal obligations.

If you need legal help from a debt recovery lawyer, please complete your free legal enquiry form on the right, or click here.

You should treat debtors and third parties fairly and with respect and courtesy. You should never harass or coerce them, treat them unconscionably or mislead them as to the nature of their debt, their legal obligations or any possible outcomes if the debt is not paid.

You should also not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.

Contacting a debtor

Communications with the debtor must always be for a reasonable purpose, and should only occur to the extent necessary. It may be necessary and reasonable for you to contact a debtor to:

-give information about the debtor’s account
-convey a demand for payment
-accurately explain the consequences of non-payment, including any legal remedies available -to the collector/creditor, and any service restrictions that may apply in the case of -utilities (for example, electricity)
-make arrangements for repayment of a debt
-put a settlement proposal or alternative payment arrangement to the debtor
-review existing arrangements after an agreed period
-ascertain why earlier attempts to contact the debtor have not been responded to within a -reasonable period, if this is the case
-ascertain why an agreed repayment arrangement has not been complied with, if this is the case
-investigate whether the debtor has changed their residential location without informing you, when there are grounds for believing this has occurred
-sight, inspect or recover a security interest
or for other similar purposes.

You may also contact a debtor at the debtor’s request.

However, it is not reasonable or acceptable to contact a debtor to:

-frighten or intimidate the debtor
-demoralise, or exhaust the debtor
-embarrass the debtor in front of other people
or for other similar purposes.

ACCC-ASIC debt collection guideline: for collectors and creditors

The ACCC and the Australian Securities and Investments Commission (ASIC) have jointly developed a guide for those involved in debt collection. This guideline reflects the ACCC’s and ASIC’s view of how relevant provisions of the Competition and Consumer Act and the ASIC Act apply to debt collection conduct.

The guideline contains information on the role of ASIC and the ACCC in the area of debt collection, an overview of other relevant statutory and common law obligations and remedies not administered by the ACCC or ASIC, and practical guidance for collectors and creditors in the areas listed below.

Contact for a reasonable purpose only (this section appears above)
Making contact with the debtor
Hours of contact
Frequency of contact (including contact face-to-face with debtors, contact with third parties, and an explanation of undue harassment)
Location of contact
Face-to-face contact (including at the debtor’s home or workplace)
Privacy obligations to the debtor and third parties (including the collection, disclosure and handling of the debtor’s personal information, the privacy rights of third parties and obligations regarding consumer credit reports)
When a debtor is represented
Record keeping (including recording debt settlements)
Providing information and documents
Consistent and appropriate correspondence
If liability is disputed (including situations where liability is formally disputed)
Repayment negotiations
Contact when a payment arrangement is in place
Contact following bankruptcy or a Bankruptcy Act agreement
Conduct towards the debtor (generally)
Debtors at a special disadvantage (including non-English speaking debtors)
Conduct towards family members and other third parties (including communication with the debtor’s child)
Representations about the consequences of non-payment (including credit reporting)
Representations about the legal status of a debt (including statute-barred debt)
Legal action and procedures
Resolving debtor complaints and disputes
The role of independent external dispute resolution schemes

Relevant consumer protection laws

The Australian Consumer Law, which is contained in a schedule to both the Competition and Consumer Act 2010 (enforced by the ACCC and state and territory consumer protection agencies), and the Australian Securities and Investments Commission Act 2001 (enforced by ASIC), contain three general prohibitions that may be relevant to debt collection activity.

1. Prohibition of the use of physical force, undue harassment and coercion

The use of:

• physical force
• undue harassment and/or
• coercion

to support a demand for payment for goods or services/financial services is deemed unacceptable and is prohibited. These provisions are not limited to conduct directed at a debtor. They also apply to the collector’s conduct towards a third party (for instance, a family member).

2. Prohibition of misleading and deceptive conduct

Collectors are prohibited from making any statement or engaging in any other conduct (for example, impersonating someone, or using a false letterhead or document) that is misleading or deceptive or is likely to mislead or deceive.

Collectors may breach this prohibition even though they do not intend to mislead—it is enough that the misrepresentation is likely to have this effect on the type or class of person to whom the conduct is directed. In some circumstances, a collector may need to positively disclose information to avoid creating a misleading impression.

Prohibition of unconscionable conduct

Collectors risk breaching this prohibition particularly when they exert undue influence or pressure on, or unfair tactics against, a debtor who is specially disadvantaged or vulnerable.

Debt Recovery Lawyers

Every debt is different and each case needs to be considered on its merits. A tailor made approach and tactics appropriate to the particular type of debt is applied to collect your money as quickly as possible.

Debt Recovery Lawyers endeavour to collect your debt without recourse to legal proceedings through letters before action, telephone calls to the debtor, negotiation and where necessary issuing a statutory demand which can be the first step in either bankruptcy proceedings or liquidation proceedings depending on whether the debtor is an individual or a company.

Debt Recovery Lawyers have extensive experience in litigation. However, it is always the last resort and legal proceedings will never be issued without having first discussed with you the merits of the case and the likelihood that litigation will bring a successful outcome. Furthermore, legal proceedings are not issued unless you specifically instruct your lawyer to commence legal proceedings.

If you need legal help from a debt recovery lawyer, please complete your free legal enquiry form on the right, or click here.

Debt Collection Letters: what to do when your customer refuses to pay

Why is having the right debt collection letters for your business so important. Ask any business what its biggest challenge is and, chances are, you’ll be told it’s the relentless drive to win new business. Whether it’s identifying new prospects or targeting existing customers, there can be no let up in the quest to get more orders on the books. Failure to build up the customer pipeline will inevitably result in a disruption to cashflow – and that can prove disastrous for any business.

But winning new customers doesn’t, in itself, guarantee business success. There’s another, more frustrating, challenge to contemplate, and one that is completely out of your control: your customers’ failure to pay.

When your best just isn’t good enough

Picture the scene: you’ve been working night and day on a critical project for a customer, putting in hours and effort well beyond the call of duty just to ensure that your customer achieves its own targets. You meet the deadline and your customer is delighted, but 30 days after issuing your invoice, you’ve still not received payment.

A quick phone call to the customer may be met with any one of the following responses: ‘we haven’t received the invoice, please can you reissue’, or ‘the computer is down’, or ‘suchabody is on holiday/off sick’, or any other manner of uncreative excuses. You may then be lucky and receive your payment but, increasingly, such excuses are just used by customers as delaying tactics. After all, holding on to your money is a cheap way for them to get what is, in effect, a loan.

And it’s not just small businesses that employ the late payment tactic: outstanding invoices from large companies are often a business’s biggest asset. So what can you do?

Establish a debt recovery procedure

Overdue bills are a time-consuming headache, expensive to collect on your own and divert your attention away from your core business. Nevertheless, it is inevitable that somewhere along the line you are going to end up chasing your invoices.

The best thing you can do is to put your own debt recovery procedure in place to give yourself every chance of getting your money back at the lowest cost to you. This process should include one or two ‘friendly’ phone calls, followed by email, letter or fax to the customer giving reminder of the outstanding payment and your payment terms. A commercial lawyer can help you set the procedure up and provide you with templates for initial reminder debt collection letters.

But if your reminders are still failing to produce a payment, then it’s time to get serious.

If you need legal help from a debt recovery lawyer, please complete your free legal enquiry form on the right, or click here.

Enlist the help of a commercial lawyer

Okay, none of us really likes to upset customers by getting overly ‘heavy’ with them. After all, firing off a series of legal letters is hardly conducive to future business relations. But let’s face it, we’re talking about a customer who has refused to pay you what you are rightly owed and who is, therefore, potentially jeopardising the financial stability of your business. Do you really want to do more business with them?

Your focus now has to be on doing everything you can to get your money as quickly as you can. And the best way to do that is to seek the help of a commercial lawyer.

A lawyer will have a full understanding of the legalities involved and the experience required to tailor an approach specifically to your requirements, thus increasing the chances of a quick settlement. And, of course, a lawyer can be relied upon to file a claim and conduct proceedings in a professional manner at all times.

Your lawyer will help you debt collection letters and draft a Letter Before Action on your behalf, clearly setting out what is required from the customer and threatening legal action should the customer not oblige within a set time frame. For many customers, a lawyers letterhead and the merest hint that legal proceedings may be taken against them is enough to get them running for the cheque book. However, should you have a particularly reluctant customer, a lawyer is obviously best placed to take the matter further, and to court, if required.

If you need legal help from a debt recovery lawyer, please complete your free legal enquiry form on the right, or click here.

Debt Recovery Law & Lawyers Updates

Fair Debt Collection Practices In Australia

Debt collectors must act within the law when recovering debts. This means they must obey laws that are designed to protect you from harassment. Under these laws, a debt collector must not:

-use physical force or coercion (forcing or compelling you to do something)
-harass or hassle you to an unreasonable extent
-mislead or deceive you (or try to do so)
-take unfair advantage of any vulnerability, disability or other similar circumstance affecting you (this is known as unconscionable conduct.).

The information below will help people who are currently dealing with debt problems or being contacted by debt collectors. It outlines your rights under the Commonwealth consumer protection laws, as well as general advice for those who are having difficulties with their level of debt.

Unacceptable practices by debt collectors

The types of conduct set out below are likely to breach consumer protection laws, and may breach other laws as well. This is not a complete list. If you experience any of these behaviours (or other similar misconduct), you should take action.

Extreme conduct - force, trespass, intimidation

If you are confronted by extreme conduct, report it to the police immediately.

Debt collectors must not:

-use or threaten force of any kind towards you, any member of your family or any other person connected with you
-damage or threaten to damage your property
-block access to your property, or block your way
-enter your property when you have refused permission, or fail to leave when you ask them to.

Unreasonable contact, harassment, overbearing manner

Debt collectors must not:

-shout at you or abuse you, use obscene or racist language or make personal or demeaning comments (you might also want to report this conduct to the police)
-contact you more frequently than necessary or at unreasonable times,for example, it is unacceptable to keep phoning you without a break or to contact you late at night or at other unreasonable times as a way of demoralizing or exhausting you.
-make other persistent contact or unreasonable disturbances.
-Embarrass or intimidate you through other people

Debt collectors must not:

threaten or harass your spouse, partner, family member or another person connected with you

make any unauthorized contact with a child under the age of 18 years

talk about your situation to other people (including family members, neighbors or co-workers) unless you have agreed to the contact,such actions may also breach the privacy laws: see 'Finding out about your privacy rights' (below) for more details

engage in conduct that draws people's attention to your situation (e.g. send open letters to a shared post-box, leave messages that others may listen to, make their identity or purpose known to people you work with again, such actions may also breach privacy laws).

False or misleading statements and/or conduct

Debt collectors must not:

make false statements about the amount you owe, or the status of your debt,for example:

say you owe a debt when you do not

say the amount you owe is greater than it is

say that you have no choice but to pay a debt if you have a valid defence against payment, unless there has been a court judgment: see the section on 'Disputing a debt'

say that your spouse or partner must pay your debt when they have no legal liability to do so: see 'Are you responsible for someone else's debt?' (above)

say that there has been a court judgment if this is not true

make false statements about what will happen if the debt is not paid, or what the debt collector intends to do,for example:

say that unpaid debts are a criminal offence involving the police or possibly jail (being in debt is not a crime!)

say that your children can be taken away from you (this is completely false)

say that you will be made bankrupt immediately, even though there has been no court judgment or bankruptcy proceedings started

ay that your goods (e.g. your car) will be seized and sold immediately, even though there is no mortgage over the goods and no court judgment (if there is a mortgage over the goods, generally you must be given notice and 30 days to pay first)

say that your wages will be garnished (taken), even though a court order to allow this has not been obtained

say that your credit rating will be damaged, if that is not true (privacy laws limit the type of information that a credit reporting agency can hold on file, how long it can be on file, and who can access the information

use other misleading appearances or actions, for example:

send letters demanding payment that are designed to look like court documents

pretend to be (or pretend to act for) a solicitor, court or government body.

Other unfair or unconscionable conduct

Debt collectors must not:

take unfair advantage of you if you are specially disadvantaged because of illness, disability, age, illiteracy or other circumstance

take unfair advantage of you if you are ignorant of the law, the debt recovery process, or the consequences of not paying a debt.

Complaining about harassment or misconduct by debt collectors

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) look after the Commonwealth laws that protect people from undue harassment and other illegal debt collection conduct.

You should report harassment that is serious and/or ongoing to the ACCC or ASIC, or to the consumer affairs or fair trading agency in your state or territory. Conduct involving assault or threats of violence should be reported to the police.

These news come from