Debt collection laws in Australia

The regulatory framework

Debt collection in Australia sits at the intersection of several overlapping regulatory regimes. The Australian Consumer Law (ACL) — Schedule 2 to the Competition and Consumer Act 2010 — prohibits unconscionable conduct, misleading or deceptive conduct, and harassment or coercion in trade or commerce. It applies broadly to all commercial activity, including debt collection. The National Consumer Credit Protection Act 2009 (NCCP) licences credit providers and regulates credit assistance and consumer credit contracts; it applies to individuals borrowing for personal, domestic or household purposes, not to business debt.

Sitting across both is the ACCC/ASIC Debt Collection Guideline, a joint publication from the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission. This guideline sets practical standards for conduct — contact frequency, communication methods, disputes, and hardship — and is the primary reference document for acceptable collection behaviour in Australia. Separately, the Privacy Act 1988 governs how personal information — including credit information — is collected, held, and used by collectors and credit reporting bodies.

What debt collectors can do

Australian law gives creditors and their agents meaningful tools to pursue legitimate debts. A collector may contact a debtor by phone, letter, email, or text message to notify them of the outstanding amount and invite payment or negotiation. They may issue a formal letter of demand, which sets out the debt, demands payment by a specified date, and puts the debtor on notice of potential escalation. If a debt remains unpaid, the creditor or collector may commence legal proceedings in the appropriate court or tribunal, and — if judgment is obtained — take enforcement steps such as garnishing wages or bank accounts (subject to court approval) or seizing and selling assets.

Collectors may also negotiate payment arrangements and settlements, register a security interest under the Personal Property Securities Register (PPSR) where a security interest exists, and — for consumer debt — list a default on a credit reporting file after giving the required notice. All of these are legitimate and lawful actions when conducted within the rules.

What debt collectors cannot do

The boundaries on collection conduct are equally clear. Collectors cannot harass, coerce or intimidate a debtor — including through repeated or threatening calls, abusive language, or any conduct designed to cause distress. They cannot contact a debtor at unreasonable times (broadly: outside 7:30am–9:00pm weekdays and 9:00am–9:00pm weekends, or on public holidays). They cannot make false or misleading statements about the debt — for example, overstating the amount, claiming that non-payment is a criminal offence, or threatening legal action they have no intention of taking.

Collectors must not contact a debtor's employer, family members, neighbours, or other third parties about the debt itself. They may contact a third party to locate a debtor, but only if the debtor's whereabouts are genuinely unknown, and must not disclose that the contact relates to a debt. Collectors must not contact a debtor who has appointed a representative (such as a financial counsellor or lawyer) other than through that representative, and must not ignore a request to cease contact — although they may still take legal steps after a cease-and-desist request.

Contact frequency limits

The ACCC/ASIC Debt Collection Guideline sets out recommended limits on how often a collector should contact a debtor. For telephone contact, the guideline recommends no more than 3 calls per week and 10 calls per month. These are not hard statutory maximums, but regularly exceeding them — particularly after a debtor has asked for reduced contact — is likely to be treated as harassment and grounds for a formal complaint.

For written contact, the guideline encourages reasonable intervals and does not prescribe a specific cap, but the overall standard remains that the cumulative weight of contact must not amount to harassment. A debtor can ask a collector to communicate only in writing, and the collector should generally comply. If a debtor has a confirmed vulnerability — such as a serious health condition — the collector is expected to adjust frequency and method accordingly.

Commercial vs consumer debt

The most important distinction in Australian debt collection law is between consumer debt and commercial (business-to-business) debt. Consumer debt — credit cards, personal loans, buy-now-pay-later — is subject to the full weight of the NCCP and attracts specific protections including hardship provisions, mandatory dispute resolution, and licensing requirements for collectors. Commercial debt — trade accounts, unpaid invoices, business loans — is largely outside the NCCP's scope.

That said, commercial debt is not unregulated. The ACL still prohibits misleading, deceptive, or unconscionable conduct in the collection of commercial debt, and the ACCC/ASIC guideline's conduct standards apply to all debt collection activity. The distinction primarily affects the availability of the NCCP's hardship provisions and the mandatory external dispute resolution pathway through AFCA (which applies to licensed financial services providers, not all commercial creditors).

The ACCC and ASIC joint guideline

The Debt Collection Guideline: for Collectors and Creditors (published jointly by the ACCC and ASIC and most recently updated in 2014, with ongoing regulatory guidance) is the primary reference for what constitutes acceptable collection conduct in Australia. It covers contact standards, dealing with vulnerable debtors, disputes, hardship, privacy obligations, and record-keeping.

Key provisions include the requirement to provide written confirmation of a debt on request, to acknowledge and investigate disputes promptly, to suspend collection activity while a genuine dispute is under review, and to deal sensitively with debtors experiencing financial hardship or personal difficulty. While the guideline does not have the force of legislation, the ACCC and ASIC use it as a reference when assessing whether a collector's conduct has breached the ACL or other applicable law.

State-based laws

In addition to Commonwealth frameworks, each state and territory has its own Fair Trading Act or equivalent, which mirrors the ACL's prohibition on misleading and deceptive conduct and may provide additional state-specific consumer protections. State tribunals — such as QCAT in Queensland, VCAT in Victoria, and NCAT in New South Wales — have jurisdiction over certain consumer disputes and can hear complaints about unfair contract terms or unconscionable conduct.

Limitation periods for recovering debts also vary by state. In most jurisdictions, the limitation period for a simple contract debt is six years from the date the cause of action arose. In Victoria, the period is also six years; in some circumstances, an acknowledgement of the debt or part payment can reset the clock. Creditors should be aware of the applicable limitation period before commencing recovery action.

Dispute resolution and complaints

If a debtor believes a collector has breached the law or the ACCC/ASIC guideline, several avenues are available. Where the creditor holds an Australian Credit Licence or Australian Financial Services Licence, complaints about that licensee must first be directed to the collector's internal dispute resolution process, and then — if unresolved — to the Australian Financial Complaints Authority (AFCA). AFCA is free, independent and binding on licensed firms.

Complaints about conduct that may breach the ACL (harassment, misleading conduct) can be made to the ACCC or to the relevant state Fair Trading office. Court action is available to any party — creditor or debtor — where a legal right has been infringed. The National Debt Helpline and Community Legal Centres can help debtors navigate these processes at no cost.

Creditors' rights

It is important to note that the legal framework protects the legitimate interests of creditors as much as those of debtors. A creditor has a legal right to be paid what they are owed under a valid contract. If a debtor refuses to pay, the creditor may: issue a formal letter of demand; add contractual interest (where the contract provides for it); engage a licensed debt collection agency; register a default on the debtor's credit file (for consumer credit); apply to the appropriate court for judgment; and — once judgment is obtained — pursue enforcement including wage garnishment, bank account attachment, or seizure of assets.

Creditors may also register a security interest on the PPSR (where they hold a security interest in personal property), seek a statutory demand against a company debtor, or — in the most serious cases — apply for the winding up of an insolvent company debtor. These are powerful tools that Australian law has specifically preserved to allow creditors to enforce legitimate debts.

Getting professional help

Navigating Australian debt collection law is rarely straightforward — particularly for creditors managing multiple overdue accounts or for debtors facing significant financial pressure. Both creditors and debtors benefit from engaging professionals who understand the regulatory framework, operate within it consistently, and can escalate effectively when needed.

For creditors, a reputable debt collection agency will be transparent about its methods, hold appropriate registrations, comply with the ACCC/ASIC guideline, and maintain detailed records of all contact. Merion works exclusively on a commission basis — meaning there is no upfront cost — and operates within the applicable legal and regulatory framework for commercial debt in Australia. For debtors, free help is available through the National Debt Helpline (1800 007 007), Community Legal Centres, and AFCA.