Restrictions on debt collectors

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Recovering debt collection costs

As a debt collector, it is illegal to recover (or attempt to recover) from the debtor any costs associated with the collection of a debt. This includes the costs and expenses of the debt collector.

This does not apply if:

  • a credit contract allows recovery of enforcement expenses
  • the costs are stamp duty or legal costs fixed by, or payable under, rules of a court or court order, or
  • there is a term in the agreement allowing for the recovery of debt collection costs and the debt was not wholly or predominantly incurred for personal, domestic or household purposes (for example a business debt).

Debt buying

Under the National Consumer Credit Protection Act 2009, debt buyers must be licensed by the Australian Securities and Investments Commission (ASIC).

In addition, Victorian law states that if you are in the category of prohibited persons or prohibited companies, you must not purchase or accept an assignment to collect a consumer debt, even if you hold an ASIC licence.

For more information, visit Australian Securities and Investments Commission.