Debt advice calls rise as Australians face tougher collection pressure

Calls to Australia’s National Debt Helpline rose nearly 12 per cent in the year to August, with about 15,000 linked directly to debt collection. The ABC reports that advisers recommend checking whether a debt is valid, negotiating affordable repayments and using complaints processes when collectors act improperly.

Australians are seeking more help with debt as higher interest rates, rising living costs and increased fuel prices add to household financial pressure, according to ABC News Australia. The National Debt Helpline recorded 187,905 contacts in the year to August, an increase of nearly 12 per cent, or about 20,000 additional callers.

Around 15,000 contacts were directly related to debt collection. The ABC reported that some collectors are also using artificial intelligence to increase collection activity, while legal experts criticised one case involving repeated legal threats over a claim the person was not liable for.

The report said the Australian Competition and Consumer Commission is taking ARMA Group and Force Legal to the Federal Court. The ACCC alleges the companies sent 320,000 debt enforcement notices that were misleading. The allegations have not been resolved in the supplied material.

Vicki Staff, coordinator of the National Debt Helpline, advised people who receive a collection notice to first establish whether the debt is valid. She suggested writing to the collector if the debt has already been paid and providing supporting records. She also said consumers should be aware of time limits: debts more than three years old in the Northern Territory, and more than six years old elsewhere, may be statute-barred in certain circumstances.

For a valid debt, Staff recommended assessing what repayment is realistically affordable and obtaining an agreement with the collector. The National Credit Code may allow some consumers to pause or reduce payments under changed contract terms. Staff also advised checking whether a collector is registered with an external ombudsman and making a complaint where appropriate.

Nicola Howell, a senior law lecturer at Queensland University of Technology, said complaints involving financial services providers could be taken to the Australian Financial Complaints Authority after using an internal dispute resolution process. She said consumer-law prohibitions on misleading, deceptive or unconscionable conduct apply to businesses, including lawyers conducting business with consumers.