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What Do Debt Collectors Do?

what debt collectors can and cant do - knowing your rights

What Do Debt Collectors Really Do? Let Me Spill the Beans

You know that awkward moment when someone asks you at a party what you do for a living, and you have to admit, “I’m a debt collector”? Yeah, I’ve been there. Cue the raised eyebrows, the hesitant chuckle, or worse—the “oh, so you’re one of those people?” response. Honestly, I get it. The debt collection industry has a reputation. But let me tell you something: it’s not what most people think.

As the owner of a debt collection agency in Melbourne, I’ve seen it all—from wild excuses (“My dog ate the cheque!”) to heartfelt stories that make you want to waive the debt altogether (not that we can, but still). So, pull up a chair, grab a coffee (or wine—no judgment here), and let me walk you through what we actually do, minus the clichés.

 

The Basics of Debt Collection: More Than Just “Chasing Money”

Here’s the thing: debt collectors aren’t villains twirling their moustaches, plotting how to ruin your day. We’re like the middlemen (or middlewomen) in a financial game of tag. Our job is to bridge the gap between creditors (businesses owed money) and debtors (people who owe money). It’s a tough balancing act, but someone’s got to do it.

When a bill goes unpaid—whether it’s for a service, a product, or something in between—businesses often hand the account over to us. Why? Because dealing with unpaid debts, aka delinquent accounts, takes time, effort, and sometimes a whole lot of patience.

We step in with our expertise and follow a debt collection process that’s as efficient as it is fair. It’s not about hassling people. It’s about finding solutions. And yes, while we occasionally make collection calls or send collection letters, there’s a method behind the madness (and some surprising humanity too).

 

What Debt Collectors Can and Cannot Do

Let me clear up a massive misconception: debt collection laws exist for a reason. In Australia, we’re bound by the Australian Consumer Law and Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) Debt collection standards. These laws are there to protect consumers and ensure that people like me don’t turn into the bullies Hollywood movies love to portray.

Here’s what we can do:

  • Contact debtors through calls, letters, or emails to remind them about overdue payments.
  • Offer payment plans or negotiate a debt settlement to help resolve the issue.
  • Work with creditors to ensure we’ve got the correct debt details (because nothing’s worse than chasing the wrong person).
  • Take legal action, like pursuing a judgment debt, but only as a last resort.

And what we cannot do:

  • Harass or threaten anyone (seriously, we’d lose our licence).
  • Call you a hundred times a day or late at night.
  • Pretend to be someone we’re not (hello, debt collection scams, looking at you).
  • Ignore your rights to request debt validation or stop contact if you dispute the debt.

So, if you’re ever wondering what debt collectors can and cannot do, just know we’re operating within strict boundaries.

 

The Wildest Excuses I’ve Heard

Let’s lighten the mood for a second. As much as debt collection is a serious business, it also comes with its share of eyebrow-raising moments.

  • One guy told me he couldn’t pay his overdue bills because he’d accidentally spent his money on a pet ostrich.
  • Another said he wasn’t paying because the creditor’s font on the invoice was “too aggressive.”
  • My favourite? A debtor claimed they couldn’t pay because Mercury was in retrograde, and they were “manifesting financial abundance” instead.

It’s moments like these that make me laugh, but it’s also a reminder that behind every debt is a real person with a story—sometimes hilarious, sometimes heartbreaking.

 

How Debt Collectors Actually Help

I know, “help” isn’t a word you’d usually associate with us, but hear me out. Debt recovery isn’t just about making sure creditors get paid (although that’s a big part of it). It’s also about creating solutions for debtors who may be experiencing financial hardship or stress.

For example, we often negotiate with people to set up payment plans that are realistic and manageable. If someone genuinely can’t pay the full amount, we might negotiate a debt reduction or debt settlement with the creditor.

Then there’s the ripple effect. Helping businesses recover debts means they can pay their employees, keep the lights on, and continue serving their customers. It’s a win-win when done right.

 

Types of Debt Collectors: Not All Are Created Equal

Did you know there are different types of debt collectors?

  1. Original creditors: These are the businesses that are owed money (think utility companies or small businesses).
  2. Third-party debt collectors: This is where my team comes in—we step in on behalf of the creditor to recover the money.
  3. Debt buyers: These guys purchase debts for a fraction of the amount owed and then try to recover it themselves.

Each type has its own role, but the goal is the same: resolve the debt while staying within the bounds of the law.

Debunking Myths About Debt Collection

Let’s tackle some myths, shall we?

  • “Debt collectors will ruin your credit score.” Nope, the damage is already done if your account is sent to collections. We’re not the ones reporting your overdue bills; that’s the creditor’s job.
  • “You can ignore debt collectors, and they’ll go away.” I mean, technically, you can, but it’s not a great idea. Ignoring debts can lead to bigger problems, like legal action or a nasty mark on your credit report.
  • “All debt collectors are scary.” Hey now, I’ve got a dog named Snickers, bake cookies on weekends, and cry during Pixar movies. We’re not all bad!

What Happens If You Ignore a Debt Collector?

Ignoring a debt collector is like ignoring a toothache—it might seem fine at first, but it’s going to get worse. When debts go unpaid, creditors might escalate the issue. This can mean:

  • Legal action, such as a debt collection lawsuit or a wage garnishment order.
  • Impact on your credit score, which can affect everything from getting a loan to renting a house.
  • A persistent problem that doesn’t magically disappear (unfortunately).

If you’re struggling with debt, the best thing you can do is communicate. Trust me, we’d much rather work out a solution than escalate things.

 

Why I Love What I Do

I know, I know—“love” and “debt collection” don’t usually go hand in hand. But there’s something incredibly satisfying about helping businesses stay afloat while giving people a chance to resolve their debts in a fair way. It’s not just about the numbers; it’s about the stories, the resolutions, and yes, even the laughs.

If you’re a business owner dealing with past due accounts, or someone trying to navigate dealing with debt collectors, don’t hesitate to reach out. We’re here to help—no moustache-twirling required. 😉

 

Final Thoughts

So, what do debt collectors really do? We’re problem-solvers, mediators, and sometimes even therapists (seriously, you wouldn’t believe the life stories we hear). Sure, it’s not the most glamorous job, but it’s one that keeps businesses running and helps individuals move forward.

If you’ve got questions about debt collection practices, your rights, or how to handle unpaid debts, drop us a line. Just don’t blame me if Mercury’s in retrograde. 😜

Want to learn more? Check out our other posts on how to identify customers who can’t pay or what to do when a client refuses to pay or simply give us a call on +61 3 9596 9311.

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