Commercial Debt Collection and Recovery Practices
The Australian law allows creditors to collect debts from people who owe them. The people who owe creditors, known as debtors, are required to pay back whatever they owe to their creditor. Even with money on the line, a creditor should know that there is always a responsible way to go about collecting debt.
To do this practice responsibly a creditor has to understand a few standard practices that are laid down in Australian law. These practices will serve as a guideline to collecting money in question from any debtor that owes them. This should only be initiated if the debtor has failed to repay the money as per agreement. Now, with that understood, we can start looking into some general Australian commercial debt collection and recovery practices:
1. Principle of Fairness
This is one of the practices of commercial debt collection and recovery. The creditor should approach and treat the individual who owes them in a respectful, fair and courteous manner. Harassing the debtor is not an option. A creditor should NOT give a debtor any misleading information about their outstanding dues. Furthermore, a creditor should NOT give any false information to a debtor of what the law requires them to do if they fail to pay. Failing to uphold these actions constitute to an offence.
In this principle, the creditor can and SHOULD propose to the individual on restructuring the debt in a manner that is beneficial for both parties. For example, the creditor can draft a proposal to extend the repayment period. This would help ease the burden for the debtor and would enable them to repay all of their dues. This is an act of fairness and courtesy extended to the debtor.
2. Avoid illegal practices in dealing with the debtor
Any act that is illegal as per the Australian law should be avoided at all costs. This includes use of physical force and coercion, giving misleading information or the intent to use it, taking advantage of certain vulnerabilities or any other circumstance that would negatively affect the debtor. Any illegal practices against a debtor will likely lead to the filing of a case against you in a court of law. Remember, giving threats to the debtor or intimidating them in any way is not acceptable in the law. Trespassing or blocking access to the debtor’s property is illegal and should NOT be done. The bottom line is to treat a debtor in the way that you, as a collector, would like to be treated in the same situation.
3. Contact the debtor on reasonable grounds
The following is a list of possible reasons to contact a debtor:
- If the individual has changed their physical residential location and has yet to confirm information
- Sending them information about their account and billing that they may have incurred
- In case the debtor requests information from you and expects you to return a call following up
- If they have failed to repay their dues as expected in an agreement
Above is only a short general list of reasons for making reasonable contact with debtors. There are many other reasons for why a collections call might have to be made. However, make sure that the reason you choose to make a call is in line with the Australian laws for commercial debt.