Maintaining the economic health of a business is the ultimate goal of any business owner. Timely debt collection plays a crucial role in this, but this is not possible for business owners. They have to involve in several other things in the business that make timely debt collection a dream. In this situation, contractors’ debt recovery services can be very handy. Companies offering debt recovery and collection services have to operate within the framework of some regulatory bodies in Australia.
The two most talked about bodies are – the Australian Competition and Consumer Commission [ACCC] and the Australian Securities And Investments Commission [ASIC]. People have hundreds and thousands of mysterious questions and misconceptions about the debt recovery process and the role of debt collectors. This post will demystify the world of debt collection in Australia and shed sufficient light on practices, regulations, and several other factors related to this process. Let us start by understanding what is a debt collection agency.
What Is A Debt Collection Agency?
A debt collection agency is mainly a company or business specialising in the timely collection of overdue amounts and bad debts on behalf of their clients. Their primary role is recovering outstanding debts from debtors, including individuals and businesses who have not made timely payments. These debt collection agencies can operate independently or as a part of a financial institution or any other business.
What Are The Responsibilities Of An Australian Debt Recovery Agency?
These agencies must comply with the guidelines set by the regulatory bodies mentioned above. They also have to play several roles and complete several responsibilities.
Contacting the Debtors
A major part of the roles and responsibilities of Australian debt recovery agencies is reaching out to debtors through various means of communication. They can contact debtors through phone calls, letters and emails to inform them about the due date, the outstanding debts and make a request for payment.
Negotiating With the Debtors
Another significant role of contractors’ debt recovery professionals is to establish a suitable payment plan. This includes negotiating with the debtors to settle the amount as soon as possible. These professionals aim to recover as much as possible while ensuring the debtor is comfortable making payments.
Taking Legal Actions
These Australian debt recovery professionals also have the right to take legal action against debtors for not responding to phone calls, letters and emails. These debtors are stubborn and not in a mood to clear the outstanding dues, and this is where legal proceedings come into the limelight.
Compliance with the Regulations
These professionals ensure compliance with regulations and guidelines made by the regulatory bodies and mainly, the Australian Competition and Consumer Commission and the Australian Security and Investments Commission. They have to stay updated with any changes made in the laws and regulations and understand that not complying with these rules will be disadvantageous for them as an individual and as a contractor’s debt recovery agency.
Record Keeping
A significant responsibility of every Australian debt recovery company is maintaining a detailed record of the entire communication between the debt collection professionals and debtors. This should include the communication details on various channels like phone calls, emails, and letters, as well as the details of transactions in the context of debt recovery. Record keeping also includes documenting payment arrangements correspondences and the details of legal actions taken against the debtors.
Sending a Letter Of Demand
Australian debt recovery professionals can send formal letters of demand to debtors. They must outline the details of the debt and the amount owed by the debtor. The contractors’ debt recovery professionals can also include the consequences of non-payment and a light warning that legal actions will be taken if the outstanding amounts are not cleared within the given timeframe. The letter of demand must also include the last date to clear the outstanding amount.
Credit Reporting
If the debt stays unpaid, these debt collection agencies can also report this to credit reporting agencies. This way, they can impact the debtor’s credit score and their ability to seek debts and loans in future.
Skip Tracing
A crucial role of these debt collectors is employing skip-tracing techniques to locate debtors who are not in touch now. These debtors often change their contact information and go into hiding by changing their identities completely. They will take several steps for this, including checking the public records to learn everything about the debtor. This public record will include the following –
- Address History
- Travel History
- Court Records
- Credit Card Applications
- Credit Reports
- Criminal Records And Background Checks
- Driver’s License History
- Job Applications And History
- Loan Applications And History
- Phone Number Records
- Search Engines
- Social Media
- Tax Records
- Utility Bills
- Vehicular History
Debt collection agencies use skip tracing services to track down debtors to collect money and clear outstanding dues. These debtors mainly include the following –
- Tenants owing money against rent or damaged property
- Fraud employees involved in misappropriated company funds
- Clients owing money to a business
- Contractors leaving the work after payments
- Landlords vanishing after taking money from tenants
- Closed businesses still owing money or services
By Law, Debt Collectors Must Not:
- Trespass the property
- Use overbearing tactics or abusive language
- Harassing or contacting at unreasonable times or more than needed
- Mislead or deceive you
- Take unfair advantage because of illness, disability, age, illiteracy, or lack of understanding of the law
- Discussing your case with someone else without your permission
What Are The Rules And Guidelines For Debt Collection?
The Australian Competition and Consumer Commission and Australian Securities and Investment Commissions are the two main government bodies that regulate the functioning of the Australian debt recovery industry. The former ensures that recovery and collection activities comply and the Trade Practices Act 1974 rules are followed. The latter one, the Australian Security and Investment Commission, has to monitor and enforce compliance with the Corporations Act 2001, which governs the actions and conduct of financial services providers.
The primary responsibilities of these regulatory bodies are listed below.
- Providing guidelines and resources for collectors and creditors for fair and ethical practices and complying with regulations.
- Investigating complaints and taking enforcement action against illegal or unethical practices.
Businesses trapped in an unpaid debt situation can contact a contractors debt recovery company for valuable assistance and guidance related to Australian debt collection. These companies are equipped with the expertise and knowledge of debt collection, and most importantly, they hold experience in tackling the challenges in this highly flimsy industry governed rather strictly. These debt collection agencies should offer services like negotiating with the debtor, representing you in court or law, and resolving conflicts arising during debt collection.