When your debts go unpaid and the bills start stacking up, you'll likely have debt collectors come after you to try to get the money back. No matter how you incurred the debt, whether it was through credit cards, a mortgage or some other loan, debt collection is a serious issue and you need to know what your rights are. While there is no way to guarantee a debt collector won't sue you in court or that your credit file won't suffer, you can educate yourself as best you can to make sure you are prepared in the event you run into debt collection trouble.

Question 1: What rights do I have against debt collectors?

When you have a debt, the person or organization to whom you owe money can pursue you to collect on the unpaid debt, and can even hire other companies to try to collect the debt on their behalf. These debt collectors, however, are limited in the kinds of actions they can take. Debt collectors can only contact you when it is necessary and if it is for a reasonable purpose. A ”reasonable purpose” means that the collector can call to demand you repay the debt, try to arrange a method in which you can repay the debt, inquire about why you have so far failed to pay it back or try to establish a repayment plan with you.

A ”necessary” contact , on the other hand, limits the collector to certain actions. Collectors can only contact you up to three times per week, or 10 times per month, by any combination of mail or phone contact. Phone calls are only allowed between 7 in the morning and 9 at night on weekdays, and between 9 in the morning and 9 at night on weekends. Debt collectors cannot contact you on any national holiday. However, if you enter into an agreement with creditors allowing them to contact you at other times, they can do so.

Question 2: What do I have to pay?

You are only obligated to pay debts for which you are directly responsible, meaning you do not have to pay back debts incurred by your spouse, children or partner. Each person is responsible for their own debts, regardless of relationship. However, if you make yourself part of the debt, by signing as a guarantor, for example, you can be held responsible if it is not repaid.

Question 3: Can I dispute a debt?

Yes. If you believe that the debt claimed against you is erroneous or that the amount the collector is seeking is incorrect, you can dispute the debt. Request all information the creditor has concerning the debt, including any documentation, records of past payments or other related materials. Make your requests in writing and keep a copy for your records. You should also collect all the documentation you have regarding the debt. For example, if you've repaid a debt in full and a debt collector contacts you trying to collect on it, you should compare the debt collector’s records against your own. Be prepared to furnish the collector with copies of the debt documents to prove the debt has been paid. You are also entitled to request and receive a copy of any and all contracts you may have signed and all the customer care notes and records. Consider contacting the relevant authority for the debt in question if you get no satisfaction with the credit provider or mercantile agent. For example if your debt was a telecommunications debt you would contact the ”˜Telecommunications Industry Ombudsman’

Question 4: Can I negotiate new terms with the debt collector?

Yes. The debt collector's goal is to get the money that you owe. Often, creditors are willing to accept different means of repayment, including payment plans, reduced payments or other terms. In any negotiation, you and the creditor have the right to agree or disagree. Even if the creditors do not agree to the terms over the phone, you can write to them and propose your settlement terms in detail. On the other hand, if you come to terms over the phone, you should always ensure the terms are followed up in writing.

Question 5: Can I get credit counseling or debt help?

Yes. Each Australian territory and state provides consumer financial counseling services through the Australian Financial Counseling and Credit Reform Association, or AFCCRA. The services are provided confidentially and are free of charge. Also try the Financial Services Ombudsman’s office, you can also find commercial credit counseling through private companies, though these services are not free. Go to afccra.org for information about the AFCCRA and the help it can provide.