Debt collection guidelines for collectors & creditors

Personal Finance Writer · 17 September 2021
If you either owe or are owed money, you may benefit from understanding Australia’s debt collection guidelines. Here’s a brief rundown of your rights and responsibilities.

When businesses are owed money, chasing up debtors for payment can mean investing time and resources. On the flipside, consumers can find themselves struggling to repay debt for a variety of reasons, from job loss through to illness or family breakdown.

It can be a difficult situation on both sides of the fence. The 2021 Debt collection guideline for collectors & creditors, jointly released by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC), explains how both creditors and debtors should respond.

What are the debt collection guidelines in Australia?

The 2021 Debt collection guideline for collectors & creditors is a document which sets out a summary of the rules and responsibilities that apply to creditors and debt collection agents in Australia.

The guideline explains the steps that creditors such as banks and other loan providers, as well as debt collectors and debt collection agents, are permitted to take and prohibited from taking, under Australian law.

That said, the guideline also has some pointers for consumers who owe money. Importantly, it notes that if you are in debt, you are legally responsible for paying the debt(s) you legitimately owe and shouldn’t try to avoid this obligation.

How does debt collection work in Australia?

Not many of us like being in debt, and the guideline points out that most people are honest and seek to pay off their debts as best they can. However, it also acknowledges that circumstances can work against you, and you may find yourself missing a few payments or struggling to make any repayments at all.

As the guideline notes, if you have taken on a debt, you are legally responsible for repaying the money. It adds that if you owe money you should:

  • Contact your creditors and/or debt collectors if you’re experiencing financial hardship so that you have a chance to negotiate a payment plan, and
  • Be upfront and honest with creditors about your financial position, including any other debts you may have.

On the reverse side of the coin, your creditors have several options around recovering a debt. For instance, they can try and recover the money by taking you to court. Or, they can try to negotiate repayments with you – either themselves or by appointing a debt collection agency.  The guideline sets out how creditors and debt collectors should behave if they choose the latter approach.

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What is the debt collection process?

Broadly speaking, the debt collection process starts with a creditor – or their debt collector – contacting a debtor to ask for payment. Strict rules apply around the method, times and frequency of contact by creditors (more on this later).

While a creditor or debt collector may agree to a payment plan to clear your debt, they also need to advise you on what will happen if you don’t keep up the payments.

In a worst-case scenario, any items used to secure a loan you owe money on can be repossessed, but only if the creditor or the debt collection agency follows the guidelines properly. Alternatively, a creditor can take legal action to recover the debt.

If you’re in a position where you can’t afford to repay a debt – if you’ve lost your job, for example – it’s important to explain this to a creditor or debt collection agency. Any continued pressure to pay up may be regarded as unreasonable or inappropriate, depending on the circumstances.

If you’ve been approached by a debt collector, you also have the option to ask a third party, such as a financial counsellor or solicitor, to act on your behalf. This won’t eliminate the debt, but it could take the heat off you. It means a professional with experience dealing with debt collectors can handle enquiries for you, and maybe negotiate a payment plan with the creditor or debt collector.

If you don’t believe you owe any money, it’s up to the debt collector to gather the information needed to confirm the debt. While this is happening, the guideline says, a default listing generally should not be made on your credit report. If you do have an incorrect debt or default listing on your report, the guideline notes that you can ask for it to be removed for free.

What debt collectors cannot do

There are strict rules around the way debt collectors should behave. The guideline sets out a range of actions that debt collectors cannot take. These include:

  • Threatening to take action (legal or otherwise) that they’re not legally permitted to take, or have no intention of taking
  • Misrepresenting whether or not they’re legally entitled to seize goods or assets
  • Behaving in a way which could unlawfully impact a debtor’s privacy
  • Faking their identity
  • Attempting to intimidate, frighten, demoralise, tire out, exhaust, or embarrass a debtor
  • Unreasonably frequent contact, which can amount to undue harassment
  • Visiting a debtor’s home or workplace without their permission, or if permission is given, not leaving their home or workplace immediately if asked to do so
  • Making contact with a debtor outside of “reasonable contact times”, which are detailed below.

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Contact by
Monday to Friday


7:30am to 9pm

9am to 9pm

National public holidays No contact
Monday to Friday


9am to 9pm

9am to 9pm

National public holidays No contact
All workplace
Debtor’s normal working hours if known,
or 9am to 5pm on weekdays

Source: ACCC

The guideline assumes that contact will chiefly be via telephone. It recommends face-to-face contact should be considered a last-resort option, only to be used when other, less intrusive methods of contact have failed.

If a debt collector threatens you with violence or physical force, ASIC’s Moneysmart website advises calling the police. If you continue to be harassed or intimidated, contact the Australian Financial Complaints Authority (AFCA) to make a complaint and access its free, independent dispute resolution service.

How long can you be chased for a debt in Australia?

As long as you don’t have a court judgement against you, a creditor or debt collector can only pursue you for a debt for a set period of time – usually no more than six years (or three years in the Northern Territory) since your last payment or since you defaulted on the loan, depending on the jurisdiction.

If you are contacted about an old debt, the Financial Rights Legal Centre recommends that you don’t make a repayment or acknowledge the debt in writing, and instead seek legal advice.

Finally, if you’re struggling with debt or overdue repayments, it could be a good idea to seek out free, independent financial counselling by contacting the National Debt Helpline, either online or by calling 1800 007 007.

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This content was reviewed by Sub Editor Tom Letts as part of our fact-checking process.

Nicola is a personal finance writer with nearly two decades of industry experience. A former chartered accountant, who holds a Bachelor of Commerce and a Master of Education degree, Nicola has contributed to several popular magazines including the Australian Women’s Weekly, Money and Real Living.

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