Debt collection is a process by which debt collection agencies contact people who owe money to their clients. This is usually when the debt is not paid on time.
A debt collector could be any of the following:
- A financial institution such as a bank
- Another company acting on behalf of the bank to collect the arrears for the bank such as a debt collection agency
- A business collecting the balance for themselves where the debt has been allocated.
A debt assignment is when the debt is handled by a third party, such as a debt collection agency. This happens when banks can’t get you to pay the debt on time.
There are a number of agencies around Queensland. It is important to do thorough research before choosing the ideal debt collector Brisbane.
It is always best to resolve any outstanding debts before you find yourself contacted or even harassed by debt collectors. However if you are contacted, you have certain rights and regulations.
Consumer protection laws forbid debt collection agencies from unwarranted harassment and force. A debt collection agency that breaks these laws risks considerable fines, as well as court orders.
There are many legal documents outlining the industry guidelines related to debt collection.
These documents set out guidelines on how often you can be contacted by a debt collection organization, and where, when and how you may be contacted. There is also information on the type of conduct that may violate customer protection laws, including:
- Verbal or physical abuse.
- Continuous pestering.
- threats to related parties, such as family members
- False information about what will happen if you don’t pay an arrears.
If you find yourself subject to any of the above behaviour, you should take this issue to your bank. You could also report it to the consumer protection agency in your State or Territory. If you find yourself threatened in any way, you should immediately contact the authorities to prevent the matter from escalating.
If you feel that the debt is not yours or is not as large as stated previously, you may contact your financial institution to try and resolve the matter.
If your bank can’t solve the issue, the next step will be to refer it to an external dispute organisation. These are independent of any financial organisations and are available free of charge and the members of the organisation must fulfil their terms.
What to expect when you have to pay off a debt?
In an effort to collect from you, debt collectors will either send letters or call you and place the collection on your credit report.
If they have your work phone number, they’ll even call you there unless you clearly state the times you wish to be contacted. Sometimes they will even show up at your workplace to collect your debt. And surprisingly this is within the law.
Debt collectors may try to contact you several times throughout the day, particularly if you don’t answer their calls.
What does this mean for your credit report?
A debt collection record can be one of the worst things to have on your credit report. A collection account shows that you have been extremely irresponsible with your account. Your credit score can drop if this notice appears on your report. You many denied things like loans or credit cards especially if the collection is unpaid for a long time and even have a hard time applying for jobs.
Debt collection notices can stay on your credit report for more than 5 years. You can reduce the adverse effects of having a debt collection by paying it off on time. With time, the collection account will have a reduced impact on your credit score. If you continue to pay off the debt regularly, it will help your credit score to increase slowly.