Are you currently in the process of trying to collect debt from another party? If so, it’s important to understand how the debt collection process works in Australia. If you’re working with a debt collection agency or thinking about working with one, here’s what you need to know.
So how does the Debt Collection process begin?
Many businesses are faced chasing slow payers or bad debt on a daily basis, ultimately hindering their growth and their ability to meet their longer-term objectives. Business owners or operators shouldn’t get bogged down chasing payments from customers who don’t abide by their trade or contract terms – they should be focused on running and expanding their business.
If this sounds like you, it’s probably a good time to start looking to engage the services of professional and reputable debt collectors. They not only chase debts on your behalf, but also provide other useful services that can automate and streamline your overall accounts receivable management processes and systems – significantly improving your business cash flow and ability to meet your own financial obligations, stress free!
The first step is to reach out to the debtor by mail or email. It’s recommended that a maximum of three letters per week is sent per week. It’s recommended that the debt collection agency proposes a fair, realistic, and flexible payment plan. The debtor may have been put in a bad financial situation due to health problems, unemployment, and family issues.
It’s important to follow the Australian guidelines for debt collection. The agency cannot threaten any kind of action (even legally), misrepresent itself, mislead debtors with false consequences, or harass debtors to make the payment. There should be clear transparency about the details of the debt when outreach is attempted.
The second step is to follow up again in the same channels about the overdue payment. It will help to work with a debtor to come up with a more flexible payment plan. There must be an attempt to make things work with the debtor rather than enforcing everything on the agency’s terms. The agency must not demand a payment that is unreasonable or unfair.
What should you do if debtors ignore you?
The next step is to initiate contact with the debtor by phone. When contacting the debtor, the agency must make sure that you state who the caller represents and ensure that the caller is only talking to the debtor. It is illegal to divulge debt information to related third parties like family, friends, and colleagues.
Contact should be limited to three times a week and it should be made within reasonable hours (7:30AM to 9PM on weekdays and 9AM to 9PM on weekends) and not on holidays. If the debtor isn’t picking up the phone or is unreachable, then it may be a good idea to try to reach the debtor’s place of employment (9AM to 5PM on weekdays).
Making Contact in Person
Debt collectors are allowed to make contact in person but only if it is necessary. If the debtor fails to respond to email, mail, and phone calls, the only choice is to opt for face-to-face contact. When making contact in person, it should be limited to once per month. You can meet in person more often if permission is granted by the debtor.
If visiting the debtor’s home, then it must be clearly stated what the purpose of the visit is. It’s also recommended that you state that you are making the visit in the other channels first. If the debtor refuses to talk face to face, then a negotiation to talk at a better time should be made.
Other things to keep in mind is the statute of limitations for bad debts in Australia. It can range anywhere between three to six years depending on the particular state or territory. Laws on the overall process of the collection of debts will also differ based the state and territory, so it can obviously be quite confusing how to adhere to protocol, hence why many businesses are starting to engage debt collectors Sydney or debt collection Perth agencies.
That’s why the debt recovery Adelaide process should be handled by professionals. It’s important to stay within the legal boundaries in Australia, and know how debts should be handled should the debtor not respond. Hopefully, this outline has given you a better insight of what needs to be done when collecting debt.
