Debt is a fact of life. Rarely is a home or expensive consumable purchased without finance of some kind.
Australians typically manage their financial obligations well, but higher interest rates, cost of living pressures and unexpected expenses can combine to stress a household budget.
In an increasingly cashless economy, it can be more difficult to keep track of spending, and before you can say, tap-and-go, the morning latte and muffin has maxed out the credit card.
Many can tighten the belt and get back on track. Unfortunately, others find themselves caught in a downward spiral that quickly gains momentum until they realise they’re in over their heads.
Failure to meet your financial obligations may result in you being contacted by a debt collection agency as creditors seek to recoup their losses.
While this is traumatic, keep your cool and remember that you have rights.
According to MoneySmart.gov.au1 a debt collector can only contact you:
- by phone between 7:30 am and 9 pm Monday to Friday, up to 3 times per week or up to 10 times per month,
- face-to-face only as a last resort, any day between 9 am and 9 pm
- by email or social media if they are sure no one else has access to your private messages.
Debt collectors may:
- request payment or ask why you haven’t met a payment plan,
- offer to make or review a payment plan,
- advise consequences for non-payment,
- repossess goods for which you owe money.
Debt collectors cannot:
- trespass on your property,
- bully, mislead, harass or abuse you,
- deceive or take unfair advantage of you.
If you believe a debt collector or agency they represent has acted outside of their boundaries, you are within your rights to take action.
Violent or threatening behaviour is never acceptable; immediately contact the police.
Alternatively, if the collectors are intimidating or harassing you, write to them or their agency to report the behaviour and request it be stopped.
If this doesn’t work, reach out to the Australian Financial Complaints Authority on 1800 931 678 for advice.
Debt collectors aside, you must take action to manage your debt. No debt ever went away because it was ignored, but there are ways to dial down the pressure.
Here are some steps you can take today to get started:
- Make a list of all your obligations. Scary, sure, but knowing what you owe is the first rung on the ladder out of the red and into the black.
- Contact your mortgagee – seriously! Nobody wins if you can’t pay your mortgage; they really will help you set up a manageable payment plan until you’re back on your feet.
- Contact your utility companies. Again, they’ll help you set up a payment plan and going forward, may allow you to make monthly payments at a set amount. Bye-bye bill shock!
- Seek help via the National Debt Helpline (1800 007 007) or through the government’s MondaySmart.gov.au website.
You can also seek professional assistance from a qualified financial adviser. They’ll work with you to create a budget and/or a realistic strategy for managing your expenses and guide you in developing a plan to move forward and eliminate debt.
Debt can be debilitating and seem overwhelming, but by understanding your rights, knowing where you stand financially and seeking professional advice and support, you can take back control of your finances and look towards a comfortable financial future.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
1 https://moneysmart.gov.au/managing-debt/dealing-with-debt-collectors
