How to deal with credit card debt collectors

Information verified correct on October 28th, 2016

Are you falling behind on credit card payments and worried about dealing with debt collectors? Read this guide to find out how you can take control of the debt collection process.
If you have been struggling with credit card debt for a while, it’s important to consider the possibility that a debt collector could become involved. It’s their job to follow up and settle debts if the credit card issuer decides to enter the debt collection process.

In some cases, the tactics debt collectors use to contact you and negotiate payments can be intimidating, so it is important to know your legal rights and options throughout this process.

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What should I do if I can’t pay back my credit card debt?

When you are having trouble making credit card payments, there are a few options you can consider either before or after a debt collector gets involved. The steps you can take include:

  1. Contacting your credit card issuer. Let your issuer know about challenges or changes in your circumstances so they can work with you to arrange a repayment plan. Many credit card issuers have support and hardship officers available to help you work through these difficulties before things get even more out of hand, so it’s important to contact them as soon as you can.
  2. Applying for hardship variation. This is a formal request for changes to the terms and conditions of the loan (in this case, your credit card). You can apply for hardship variation if you are experiencing difficulties such as illness, unemployment or changed financial circumstances. Contact your credit card issuer in writing or over the phone, explain your difficulties, how long you think they will continue and how much you can afford to pay off the card. The issuer will then have to respond within 21 days of your request with the outcome of your request and your different options.
  3. Talking to a financial counsellor. Financial counsellors can give you specialised advice based on your situation, and may also negotiate with lenders on your behalf. The Financial Counselling Australia website has more information about these services and also includes a “Find a counsellor” section if you want to get in contact with someone near you.
  4. Seeking free legal help. There are community legal centres and free legal aid services across Australia, such as Legal Aid NSW and Victoria Legal Aid. The government’s MoneySmart website has a whole list of free legal services you can access when you need support and guidance about your debts.

Any of these options will give you a clearer idea of your rights and responsibilities, as well as ways to move forward and deal with the debt. It’s also important to remember that the sooner you deal with credit card debt issues, the better chance you have of working out payment terms that will fit with your circumstances.

couple-facing-a-debtcollectorWhen will debt collectors get involved?

Debt collectors usually won’t get involved straight away. In most cases, your credit card issuer will contact you directly about the debt until more than 60 days have passed with no payment. Once that happens, the account is considered “in default”, and your issuer can choose whether or not to enter the debt collection process.

Some issuers may continue to contact you directly after your account is in default, but they also have the option of using a debt collector to deal with the situation.

What can debt collectors do if I owe money?

Debt collectors will contact you to discuss your credit card debt and different payment options. The way they contact you varies, but can include:

  • Phone calls
  • Letters
  • Emails
  • Social media
  • In person

Debt collectors may use one or a combination of these contact methods to get in touch with you but there are also legal rights and limitations to the amount of contact they can have with you.

For example, they can only contact you by phone or mail up to three times a week or 10 times per month and may only make phone contact between 7:30am and 9pm on weekdays or between 9am and 9pm on weekends. Debt collectors are also not allowed to contact you on public holidays and are advised to avoid face-to-face meetings as much as possible.

The Australian Competition & Consumer Commission (ACCC) has a general guide to the conditions and requirements debt collectors should meet when dealing with individuals and it’s a good idea to refer to this information if you think the contact you receive is unreasonable.

What else can debt collectors do to get the money you owe?

If written, phone or face-to-face contact does not lead to an agreement between you and the debt collector, they have two other options:

  1. Legal action. If your debt exceeds $3,000 and you don’t pay by a given time, the debt collector or provider can consider initiating legal action. If the debt process gets to this stage and you end up losing the case, the ruling makes it onto your credit file.
  2. Repossession or bankruptcy. If your debt is significant, your credit card provider or a debt collection agency can initiate proceedings to repossess some of your assets or even lead you towards bankruptcy. If a bankruptcy ruling makes it to your credit file, it will make borrowing money in the future very difficult.

Your rights when dealing with debt collectors

It can be confronting to be contacted by a debt collector, so it’s important to know exactly what your rights are if they ever contact you. Some of the key things to keep in mind include:

  • Privacy. Debt collectors cannot let other people know about your situation without your permission. That means they cannot reveal that they are debt collectors to anyone else connected to you in person, over the phone or on social media. In fact, if they use social media or email to contact you, they must be reasonably sure the account is private. If you ever believe a debt collector has violated your privacy you can report it to the Office of the Australian Information Commissioner.
  • Contact on public holidays. Debt collectors are not allowed to make contact with you on a public holiday unless you have agreed to it.
  • In person contact. A debt collector should only visit you face-to-face if they have unsuccessfully tried to contact you via phone or in writing. If they do show up, they have a legal obligation to treat you and anyone else present with respect. They should also leave immediately if you ask them to.
  • Behaviour. Debt collectors should always treat you with respect and be polite. It is illegal for debt collectors to force, trespass, intimidate or harass you, and they cannot make false statements about you or the debt you owe.
  • Negotiations. You have a right to discuss your circumstances with the debt collector and to suggest reasonable repayment terms.
  • Disputing the debt. If you do not believe the debt is yours or if you disagree with the amount that is owed, you have a right to legally dispute it. The ACCC has detailed information on the different ways you can dispute debts based on different circumstances.
  • Advice. You have a right, at any time, to seek legal advice to deal with a debt. In some cases, you may want to inform the debt collector that you plan to seek legal advice and suggest a time for them to contact you or a representative who will speak to them on your behalf.

If you ever feel that a debt collector has mistreated you, then you should make a formal written complaint to the debt collection agency. You can also contact the ACCC or the Australian Securities & Investments Commission (ASIC) for further guidance and support.

Frequently asked questions

If my credit card debt is passed on to a debt collector, will I still have to pay an interest rate on the amount I owe?

Debt collectors will set up a debt payment agreement with you through their agency. There may be an interest rate depending on the particular debt agency, although generally there is only an agreed amount and payment term.

I have unpaid credit card debt but plan to remain overseas for the next few years. Do I have to repay my debt?

It is ideal that you repay your debt before you leave or as soon as possible, because the process to collect the outstanding debt does not change owing to your non-presence in Australia. When you return, you could have a ruling of repossession or bankruptcy staring you in the face.

How much time does a default remain on my credit file?

In general, a default can stay on your credit file for up to five years, even if you have settled the account in that time. However, if you have a default that is considered “a serious credit infringement” it could be listed on your credit file for up to seven years.

If I have a savings account with the same bank where I have a credit card debt, can it withdraw money from my savings account?

The bank can do this only if it has the required permission through a court ruling.

If you have unpaid credit card debt and have not addressed it with your issuer, then they could consider using a debt collector to settle the account. While it can be confronting to go through the debt collection process, learning more about it and understanding your rights and responsibilities will help you resolve the situation as quickly and reasonably as possible for everyone involved.

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Sally McMullen

Sally McMullen is a journalist at who is a credit cards and travel money expert by day and music maven by night.

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296 Responses to How to deal with credit card debt collectors

  1. Default Gravatar
    barry | October 2, 2016

    other credit car lenders wont accept mine for interest free 12 months because I’m on a pension

    • Staff
      May | October 6, 2016

      Hi Barry,

      Thank you for your comment.

      Just to clarify, are you looking for a credit card with 0% interest on purchases for 12 months? If so, you can find a list of credit card companies on this page that accept applicants who are retired and pensioners. If you click on the name of the credit card company, you’ll be able to view the credit cards and the promotions they offer on purchase and balance transfer rates.


  2. Default Gravatar
    Jal | September 20, 2016

    Hi ,
    My friend has owed the personal loan around $40000 and credit card around $5000 , he didn’t pay off the bills almost 3 years because he used the money for helping his family.

    Past 3 years he never put money in the bank even others bank in Australia.

    Do u think he can loss his money if he put his money in other bank?
    Will the police catch him about so much money that he owes ?


    • Staff
      Arra | September 20, 2016

      Hi Jal,

      Thanks for your question.

      Please note that is an online comparison service and is not in a position to recommend specific products, providers and services. We can only provide general information such as our guide on getting out of debt.

      I hope this has helped.


  3. Default Gravatar
    ak | September 15, 2016

    i owe around 25k ( without interest,per loan,credit cards 2 bank) overseas for over 1 year no job , didn’t make a payment.
    is it possible to settle everything at once for less payment.
    i can borrow around 10k ?

    • Staff
      Jonathan | September 20, 2016

      Hi Ak, thanks for your inquiry!

      To clarify is your debt owed overseas or with an Australian bank? Unfortunately no Australian credit cards allow transfers of overseas debt. You may like to consider personal loan options.



  4. Default Gravatar
    Junior | August 4, 2016

    Can an New Zealand Debt Collection company sell the debt to a Australian agency to recover debt owed even if they are the same company?

    • Staff
      Chester | August 8, 2016

      Hello Junior,

      Thanks for your question.

      Generally no, unless the bank really wants to collect the debt off you. It usually depends how much the debt is, if it’s worth the bank’s worthwhile generally they will transfer the debt.

      I hope I was able to answer your question.


  5. Default Gravatar
    Rod | August 1, 2016

    I recently over paid my credit card bill in excess of $4500.
    When i contacted the credit card provider they informed
    Me that my account had been sold to a collection agency only 6 weeks earlier. They then informed me that standard protocol is for them to forward all monies paid to them to the collection agency and that it is my responsibility to go chase the money from the collection agency. Is this correct? Because i can see this being a challenge having the hunted chasing the hunter for a change. I also think i may have another account with the collection agency if that is the case can they legally hold onto the monies and put it towards the other debt instead of refunding me the amount that was overpaid? Any info or advice is appreciated. Thank you

    • Staff
      May | August 2, 2016

      Hi Rod,

      Thanks for your inquiry. Please note that you’ve come through to we are an Australian financial comparison website and general information service. We are not credit experts and can only give a general advice.

      You’d be best if you contact the debt collection agency directly if they could put the excess money (from your overpayment) to your other debt. For sure they’ll be able to trace your account and record.


  6. Default Gravatar
    Vikram | July 28, 2016


    I lived in Australia from 2009-2013 july. Between the years 2011 & 2012 i was financially broke. I had a credit card worth $4000 and other bad credit loans of $400 and $500 etc which i think altogether addup to around $8000. i was defaulted in 2012 and i moved back to my home country in 2013. Recently a person from commonwealth bank contacted me at my work place at my home town, may be he tracked down my linkedin profile to get my number. Ok now as per the telephonic conversation with him, he said outstanding debt on my credit card is $9000( interest and fines added up in the past 4 years) he said he would accept $6000 as a full and final payment and he said if i dont he would send his debt collectors who are presently located in one of the popular state in my country and would take help of the court in my country and sue me.

    Now my question is, was he just threatening or is he really capable of doing what he said.? Is it possible to chase me overseas.? And also let me know by which year my credit file gets reset?

    • Staff
      May | July 28, 2016

      Hi Vikram,

      Thanks for your inquiry.

      Just to confirm though that you’ve come through to we are an Australian financial comparison website and general information service. We are not credit experts and can only give a generalised advice.

      Before creditors begin their legal action to recover the total amount of the debt you owed them, there should be a proper process that must be done. Debt collectors should not get to you in court without undergoing the due process which is outlined on this page.

      As your debts are civil debts, you won’t be chased overseas. But keep in mind that these payment defaults will stay on your credit file for five years. It would best that you get a copy of your credit report (free online) so you would know your credit status.

      Hope this helps.


  7. Default Gravatar
    | July 18, 2016

    I have Credit Card debt of 92000AUD with four different banks. I spend all on for medical expenses to save family member from Cancer. I am in very bad situation finances and family wise. I have to leave Australia to look after my Mom and Dad who are battling with illness in INDIA. I will not be returning to Sydney at least 8 yr time. I cant pay the debt with current situation.
    Will i be questioned and taken to court in INDIA. will my dad property in India be at risk. very depressed please mail me what to be done.can they charge me against the unsecured debt in India?

    • Staff
      May | July 20, 2016

      Hi Samuel,

      Thanks for your comment and I’m sorry to hear about your difficult situation right now. Just to confirm though that is an Australian financial comparison website and general information service – we are also not credit experts so we can only give you a generalised advice.

      Civil debts in another country will only stay in that country where you have applied for the credit. So, in your case, your credit card debts in Australia will only remain in Australia and you will not be put in court in India and therefore your father’s property will also not be at risk.

      Just keep in mind though that these credit card debts you have defaulted in Australia will remain on your credit file (in Australia) for 5 years and until these are repaid, these debts will still incur interests. So, it’s still best, once you have already improved your finances, even before you go back to Australia, you start paying off your credit card debts slowly until you’re able to fully repay them. It may also help if you order your credit report online (for free) so you can monitor the status of your credit file.

      I hope this helps.


  8. Default Gravatar
    Luke | May 26, 2016

    Where do you stand as credit card holder when your provider allows you to become $8600 dollars overdrawn, this is also something that has never happened in the past as I have been to my limit countless times before.

    • Staff
      May | June 6, 2016

      Hi Luke,

      Thanks for your comment.

      Sorry for the delayed reply. Have you already tried contacting your bank regarding your overdrawn account and asked for options on how you can pay off the overdrawn balance? Just in case, there are also ways on how you can manage your overdrawn credit card. You can actually consolidate your debt with low or sometimes even no interest balance transfer credit cards. Please feel free to visit this page.

      I hope this is helpful.


  9. Default Gravatar
    Sid | May 12, 2016

    I am on a work visa in Sydney. In May 2016 due to money crunch, I withdraw $400 from my debit card with is unsecured debt and travelled back to India

    Can you pls let me know how it can affect me, say after few month if I might get back.

    • Staff
      May | May 12, 2016

      Hi Sid,

      Thanks for your inquiry.

      Your civil debts (in Australia) should not cause you any problem when you leave and re-enter the country. Unless you have borrowed some money from a government body, your access to the country will be examined.

      You’d be best once you’ve returned from India, you settle your debts right away.

      I hope this has helped.


  10. Default Gravatar
    Manny | May 10, 2016

    I have made a query on 6th March 2016 on your forum regarding debt period. As suggested by Jonathan, credit defaults remain on an individual’s credit report for five years so your personal loan record should have been removed. Since 7 years have subsided your credit score should be reset.

    Now, I have ordered free VEDA credit file and got it received today. There is no history of my past transactions apart from queries made by financial agencies in last 3-4 years. The last access/enquiry was on 30 Sep 2015.

    I am planning to return in 3 months, please advise are they still chasing me for debt? Should I postpone my visit or am I expecting any trouble at the airport? Please help as I am already depressed due to my family problems.

    • Staff
      May | May 11, 2016

      Hi Manny,

      Thanks for your question.

      I’m sorry to hear about your difficult situation right now and I really understand how you feel. Please be assured that even if you have enquiries on your file, you can still return to Australia without a problem.

      Meanwhile, aside from defaults, credit enquiries will also have to remain on your file for 5 years. Having known this, once you’ve returned, it would still be best to settle these debts you previously had.

      I hope this has helped.


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