“The debtor” is a common term for someone who borrows money. Quite often, the creditor (one who lends the money) may get in touch with a debt recovery agency.
When Would a Debt Collection Agency Contact You?
While the most common reason a Melbourne-based debt collection agency would contact you is to remind you of a payment that is soon to be due or to request an overdue payment. Some more reasons they could get in touch would include:
- Providing details on the account and any debt
- Clearly outlining the repercussions of non-payment, such as the legal actions that a debt collector or creditor may take or service limits that may be relevant, such as service termination
- Establishing a plan for debt payback
- Offering a payment schedule
- Reviewing current payment arrangements after a specified period
- Determining the cause of the debtor’s lack of communication
- Asking why a repayment plan that has been agreed upon is not being implemented. Looking into if the debtor has relocated without telling the debt collector when there is reason to believe this has happened
- Locating, examining, or regaining possession of a security interest, such as a car
Why Won’t They Leave me alone?
It is their job to remind you to pay the dues. Avoiding a debt collector won’t make the loan dissolve magically. A debt collector will only disappear if you ignore them. As a fact of the matter, as stated above, there may be multiple reasons they want to connect with you apart from debt collection.
Why Should You Pay Heed To The Debt Collector’s Call?
Alternate Options:
You are probably facing a grave challenge and are unable to keep up with your original payment plans. The collectors may listen to your situation and offer you a new repayment plan that works for you and the lender. Of course, if you keep ignoring the calls, recovering from the crisis all by yourself will be a challenge.
Line of Defence:
You may be sued if you ignore the debt collector. If you still need to pay attention, you may not be able to defend yourself and receive a default judgment, which might hamper your credit rating.
Save your Credibility:
Upon being constantly ignored, the lender will report you as a defaulter. Depending on the debt type and jurisdiction, this defaulter status can reflect poorly on you, your business, or both.
Your Debt May Increase:
When you ignore a debt collector, interest and other penalties increase the weight of your debt. It might be too late to negotiate a lesser debt amount by the time you react.
Let us assume you ignored the collection agency. Does that stop your loan from incurring interest? As a fact of the matter, it might incur an additional penalty and/or interest, either as a prejudgment or post-judgment interest.
Suppose you have a loan at 6 percent interest. Due to non-payment and no communication, you now have an additional penalty of 2% interest above the overdraft rate. Now you have a 6+2 percent to pay, and ignoring it is not making it any lighter. Ignore it for seven years, and your debt will have doubled.
Manifold Issues:
A judgment from the court is a public matter that will affect your credit rating. Adding a court judgment will last 12 to 15 years, incurring interest and being collectible at any time. In addition to the onerous financial burden, a lawsuit is time-consuming, which exacerbates your emotional troubles, and adds court and attorney charges to your economic issues.
Do note that a debt recovery agency can take various courses of action within the stipulated regulatory guidelines and laws.
If not you:
As per law, if the debtor does not respond, they can get in touch with your spouse, a romantic partner, a guarantor, or a relative.
You Are the Best Judge:
Let’s face it; problems are like pregnancies. No one is a little pregnant. They keep growing if you keep ignoring them. So, the best option we have is to deal with it. Instead of ignoring them, it is wise to talk to them, explain the situation, and work with them to get better options. Getting slapped with a judgment that spoils your hard-earned credibility, adds on penalties, and increases your financial burden is not a good option. We have complete faith in you and your ability to cope with your situation. The debt collectors are doing their job and can be of help.
Next time a debt recovery agency contacts you, be respectful, and they will reciprocate.
Frequently Asked Questions
Ignoring a debt collection agency can lead to serious consequences. The agency may escalate their collection efforts, potentially leading to legal action. This could result in court judgements, wage garnishment, or asset seizure, depending on the jurisdiction. Additionally, continued non-payment will likely damage your credit score, making it difficult to secure loans or credit in the future.
If you’re looking for professional assistance, consider reaching out to a reputable debt collection agency near you that can help negotiate suitable payment arrangements
While you can request that a debt collection agency communicate with you only in writing or through your legal representative, completely refusing to deal with them is not advisable. Debt collection agencies have legal rights to pursue legitimate debts. However, you do have the right to verify the debt and request proof that the debt is yours before making any payments.
Professional debt collection services in Sydney understand these rights and will work within legal frameworks to find mutually acceptable solutions.
When dealing with a collection agency, avoid admitting liability for the debt without verification, making promises to pay that you cannot keep, providing personal financial information unnecessarily, or using aggressive language. Never give collectors access to your bank accounts or authorise automatic withdrawals without careful consideration. It’s also advisable not to discuss debts that may be past the statute of limitations.
As the best debt collection agency in Melbourne, eCollect’s debt collectors are trained to handle these conversations professionally and will respect your rights during the process.
Ignoring debt collectors in Australia is not recommended. Australian debt collectors operate under strict regulations but have various legal means to recover debts, including taking legal action that could result in court judgements against you. This could lead to enforcement actions such as wage garnishment or property seizure. Additionally, unpaid debts can significantly impact your credit score for up to five years.
Debt collectors in Australia can contact you to request payment, negotiate repayment plans, and take legal action if necessary. However, they cannot harass, intimidate, or mislead you. They must respect contact time restrictions (generally between 7:30 am and 9:00 pm on weekdays), maintain your privacy, and not make false claims about consequences of non-payment. They must also follow guidelines regarding contact frequency and cannot continue collection efforts if you’ve demonstrated the debt isn’t yours.
Before paying a collection agency, verify that the debt is legitimate and still within the statute of limitations. Sometimes, making even a small payment on an old debt can restart the statute of limitations clock. Additionally, consider negotiating a settlement for less than the full amount. Always get any agreement in writing before making payments.
If you ignore or avoid a debt collector, they may escalate their collection efforts, which could include more frequent contact attempts, reporting the debt to credit bureaus (damaging your credit score), or pursuing legal action. If the debt collector obtains a court judgement, they may be able to garnish your wages, place liens on your property, or freeze your bank accounts, depending on local laws. The specific consequences vary by jurisdiction but generally become more severe the longer you avoid addressing the debt.
Next time a debt recovery agency contacts you, be respectful, and they will reciprocate.