The best way to deal with creditors

Dealing with creditors can be overwhelming when you don’t know your rights, where to seek help or what to do. When you fall behind on your bills, rent, loan, credit card or debts, your creditor may obtain a debt collector. The debt collector will then be in contact with you to retrieve the debt for the creditor. A debt collector is an individual who can work for themselves, a lender (traditionally a bank), debt collection agency or a service provider.

It is important to note that creditors have a right to hire a debt collector to retrieve their funds. In this article we outline how to deal with creditors and what they can and can’t do. It’s important to know your rights during this time.

Know your rights when dealing with creditors

What debt collectors have the right to do

Debt collectors have the right to ask for the funds that are owed to your creditors. They must respect your privacy and follow certain rules when it comes to contacting you.

Debt collectors can:

  • Ask for the funds owed
  • Offer a payment plan
  • Question as to why the funds have not been paid
  • Inform you of what will happen if the funds are not paid
  • Review the agreed payment plan
  • Possess goods you owe money on, given that they have followed the correct process

Contact you by:


  • No more than three times a week, or 10 times a month
  • between the hours of 7:30am-9pm on Monday-Friday or on weekends 9am-9pm
  • on national public holidays (not state)


  • only if they are certain you do not share the account

Face to face;

  • any day between 9am-9pm
  • a debt collector can only contact you face to face if you haven’t responded to any other points of contact

What debt collectors don’t have the right to do

A debt collector cannot bully or harass you. It is important to know your rights when a debt collector contacts you. If you feel as though the behavior of the debt collector is not okay, contact the Australian Financial Complaints Authority to make a complaint and get free dispute resolution advice.

Creditors can hire debt collectors to retrieve the owed funds

A debt collector cannot perform the following:

  • trespass your property
  • harass or bully you
  • provide misleading information
  • discuss your debt with someone else without your permission
  • incorporate inappropriate tactics and language
  • take advantage of you due to your illness, age, ethnicity, literacy level or level of knowledge of the law and your rights

Dealing with creditors

It can be a lot to deal with when you receive final notice letters and debt collection calls, but it doesn’t have to be. It’s always important to be kind and honest to your creditors, as the outcome may be better than you think. Most lenders are more open to discussing your debt than you think. This is due to the fact that debt collectors buy debt per dollar, so they make a profit even if the debt isn’t paid in full. This makes it important that you speak to your creditors as they may be flexible when it comes to settling for an amount less than your full debt.

10 tips on dealing with creditors

  • be honest
  • agree to a payment plan if you can afford it
  • inform the debt collector if your contact details change
  • reply in a timely manner
  • keep your story straight when discussing your finances
  • take notes
  • ask questions
  • always be friendly
  • record who said what during discussions
  • note down the date, time and how and who you were contacted by

How to deal with creditors when you can’t pay

When you know you have a debt to pay but are struggling to pay it, it can be very stressful. It is even more stressful when you don’t know your options or how to speak to creditors about it. We’ve outlined the steps you need to take when you’re facing this situation.

    What to do when you can’t repay your debt
  1. Write out what you can afford
    Once you’ve been informed to repay your debt, it’s time to sit down and sort out your finances. Start by calculating your income, expenses and the remaining funds. From that you can create a budget planner.
    If you find you are struggling with income and expenses, and cannot pay your debts, you could be trading insolvent. In this case you will need to speak to an insolvency expert as you may have to liquidate the company.

    For more information on trading insolvent, refer to our article ‘A Guide to Business Insolvency’.
  1. Create a payment plan
    As we have mentioned, speaking directly to creditors is a great approach to take. Let them know you’re facing financial distress and propose a payment plan based on the budget planner you have created on what you can afford to pay. You may be surprised to know that sometimes they will approve you to pay small amounts of funds over a period of time. The creditor may agree to close the debt if you can only pay part of the sum or even waive the debt if you’re on a low income with no assets if your financial situation will be unlikely to change.

    Once you propose a payment plan, ask the debt collector to put it in writing. If the payment plan is rejected you can make a complaint to the appropriate parties below:

    ACT: Access Canberra website or 13 22 81
    NSW: Fair Trading NSW website or 13 32 20
    Northern Territory: NT Consumer Affairs website or 1800 019 319
    Queensland: Office of Fair Trading Queensland website or 13 74 68
    South Australia: Consumer and Business Services website or 13 18 82
    Tasmania: Consumer Affairs and Fair Trading website or 1300 654 499
    Victoria: Consumer Affairs Victoria website or 1300 558 181
    Western Australia: Department of Commerce website or 1300 304 054
  1. Ensure you are following the payment plan
    Make sure you are repaying your debt based on the approved payment plan. If you are struggling to do so, contact the debt collector immediately and explain your situation to propose a new payment plan.

The top 4 reasons you should always check mail from creditors

As tempting as it is to throw away bills and mail from creditors, it is crucial you refrain from doing so. You should always check mail from creditors, read them and act immediately. The longer you wait to deal with the creditor, the worse it can get. Once you’ve read the mail, think about how you would like to deal with it. If the mail looks strange or unfamiliar, contact your creditor and ask for proof and understanding of it.

We have outlined the top reasons why you should always check your mail from creditors:

  1. Skipped an invoice
    Running a business can be stressful and often things can get missed. You may have skipped an invoice and forgotten about it. This is why it is vital to check mail from your creditors before the invoice increases.
  2. Statement of account
    Creditors send you a statement of account which is a great tool to incorporate in your balance sheet. You may be above or below your account and not know.
  3. Information of legal action
    Your creditor may be closer to taking legal action and with the threat of winding up the business. Checking mail makes you aware of everything that is occurring regarding your business.

Want to know more about dealing with creditors? Contact our experts for a free consultation on 02 9220 7100.

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