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Australian Commercial Debt Collection Practices

ArticleID 165  
Writer Isaac Thuku
Category Personal Article

Collection in Australia can be reduced only if debtors were prompt and responsible in their action. There are different reasons why debtors decide to default from debts. These may include bankruptcy, financial difficulties etc. and not just fraud or evasion. In Australia, there are two bodies that are responsible for enforcing protective laws when referring to collection. These are the The Australian Securities and Investments Commission (ASIC) and The Australian Competition and Consumer Commission (ACCC). The ASIC is responsible for collection in reference to debt related to a financial service and the terms provided to it. The ACCC is responsible for collection in reference to the sale of goods and services not related to financial services. They seek to protect both the debtor and the collector.

The ACCC and the ASIC advocate for flexibility from creditors and collectors. They need to first identify debtors and their situation. Are they experiencing any financial hardship? Do they have more than one debt owing different creditors? When referring to flexibility, they need to arrange a reasonable payment option while putting into consideration the debtor's current basic expenses that he requires to survive. The process should not be humiliating or cause discomfort. In this, both parties need to be fair, flexible and realistic.

A collector can therefore not mislead, coarse, or harass the debtor in any way. It is the role of creditors and collectors to ensure that payment is made by consumers and/or businesses. The consumer and business needs to be lawfully bound to make the payment or repay the agreed payment. Even at this, they are prohibited to use any sort of physical force. In addition, they cannot mislead a debtor or use deceptive tactics during the collection practice.

The public needs to be aware of their rights and responsibilities. This helps to ensure that no party is taking advantage of the other. In this, the ACCC and the ASIC come together to ensure that both collectors and debtors understand what is expected of them. At this, the collectors and creditors also reduce the risk attached to lending and sale of goods. These bodies have therefore provided a Debt Collection Guideline that is readily available at no cost.

The guide provides the responsibilities of both the creditors and collectors. They are expected to provide binding contracts and documents when asked for by the debtors. They should not at anytime involve third party in relation to collection from persons related to the debtor. A debt belongs to the individual in question and not others related to him as well.

When a debtor is facing financial problems, creditors are encouraged to negotiate an alternative repayment options. Not everyone is out to commit fraud and after putting into consideration the debtors current financial situation, the creditor may adjust payment options.

There are different concerns raised by the creditors, collectors, and the consumers. The ACCC and the ASIC both consider these concerns and provide a guide on how they should be addressed. These bodies ensure that both parties (the collectors/creditors and the debtors) are acting in accordance to the provided law.
Australian Commercial Debt Collection Practices
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