|Debt is the money one person owes to another.
A debtor is the person who legally owes the money, or has agreed to pay money.
A creditor is the person or company who the money is owed to.
By signing up to a contract, you agree to pay the company money every month. In exchange, the company agrees to provide you with the product, good or service. This makes you the debtor, and the company the creditor. If you do not pay your bill, then you are in debt to the company.
You will also become the debtor if you sign up for a product, good or service for someone else, such as friend or someone in your family. Because you signed the contract, the company will see you as the person who owes the money, even if you’re the one not using the product, good or service.
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A debt collector is a person who collects debts for a creditor such a phone company. Mostly, debt collectors work directly for the company, but sometimes debt collectors work for another company called a debt collection agency. Debt collectors will put pressure on you to pay your bills. However, there are legal limits on this pressure.
Debt Collection Agencies are specialised companies who chase up unpaid bills and debts. Companies sometimes use them rather than chasing you up themselves.
An assignment of debt is where the person who you owe money to changes. Companies will often assign your debt to the debt collector. This does not mean that you no longer owe someone money, but rather that you need to pay the debt collector and not the company. If a company does assign your debt, they need to let you know in writing.
A debt collector might contact you by:
This is a serious situation! The debt collector can ask the court to take your property and sell it to pay off your debt, or have money taken out of your wages. Additionally. if you get in trouble with your company for failing to pay your bills or debt, then you will likely be given a bad credit history.
Credit History is a record which tells companies how likely you are to pay back a loan on the basis of your previous behaviours. Failing to pay previous debts or loans on time will often indicate that you will be less likely to pay in the future. If you have a bad credit history you may find it difficult to buy things using credit in the future. This means that if you want to get a loan or a credit card to buy something else (like a car or a house) later on, a credit card company or a bank might think twice or even refuse to lend you money based on your credit history.
If you reach an agreement with the debt collector over the phone or in person, you should always ask for that agreement to be confirmed in writing. You could confirm it in writing yourself, by writing a letter to the debt collector or creditor. It is important to keep a written copy of the agreement, as well as a record of any phone calls. In keeping these records you should always get write down the date and time of the conversation, the name and job title of any people you speak to, as well as a note about what you spoke about.
An authorised representative is an adult who will represent you and advocate on your behalf about the debt. You can appoint an authorised representative by calling the company and giving a specific the right to talk to the company on your behalf. It is always important to check that the person who you want to authorise is okay with it, and knows that you have authorised them. Common authorised representatives include ﬁnancial counsellors, ﬁnancial advisors, community workers, and lawyers; as well as parents, guardians or carers. Remember, you don’t have to face the debt collector alone!
A Financial Counsellor (or Debt Counsellor) is qualified person who can help you to develop a plan to pay off a debt and help explain your rights to you. There are free and independent financial counselling services in each State and Territory. In order to help you develop a plan to pay off your debt, they will often ask you to think about your income, expenses, what you own and other debts that you owe.
A Community Legal Centre is an organisation that can provide you will legal advice or information about your debt and other legal matters generally. The lawyers who work at these centres can give you specific advice on what to say to your company or the debt collector. They can also help you if you need to contest the debt, or if you think the debt collector is putting too much pressure on you.
|Consumer Action Law Centre||(03) 9629 6300 or 1300 881 020|
|Credit Helpline||03 9602 3800 or (regional Victoria): 1800 803 800|
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