Debt Collection Guidelines

We all have outstanding debts and staying on top of them is imperative for small business cash flow. One the first things to remember is that you should make a point of keeping records of all email, mail and phone correspondence with your customer during the debt collection period – records of any missed payment dates previously agreed to are helpful if the process escalates.

Over the coming 6 weeks we will outline a Debt Recovery Procedure you may wish to follow. It is always good to remember there are certain debt collection practices that are banned in Victoria for contacting your customers for overdue payments. These include:

• entering or threatening to enter a private residence without lawful authority

• using any threat, deception or misrepresentation to obtain consent to enter a private residence

• refusing to leave a private residence or workplace when asked to do so

• exposing or threatening to expose a person or a member of that person’s family to ridicule or intimidation

• using a document that looks like an official document but is not

• impersonating a government employee or agent

• attempting or threatening to possess any property to which you are not entitled. For example, when collecting a debt, you must not say you are going to seize a home or other property that you cannot legally take

• disclosing or threatening to disclose debt information, without the debtor’s consent, to any person who does not have a legitimate interest in the information

• making a false or misleading representation regarding the nature or extent of a debt, or the consequences of not paying a debt.

• contacting a person by a method that they have asked not to be used, unless there is no other means available. For example, you must not contact a debtor at their workplace when they have asked to be contacted only at home, or contact them directly when they have asked that all communications be handled by their lawyer or financial counsellor

• contacting a person about a debt after they have advised in writing that no further communication should be made about that debt.

• communicating with a person under 18 about a debt, if the person is not the debtor

• demanding payment of a debt from someone without having a reasonable belief that they are the debtor.

• communicating with a person in a manner that is unreasonable in its frequency, nature or content. For information on appropriate hours and frequency of contact, visit Debt collection guideline: for collectors and creditors - ACCC.