Most people in Australia are happy to work hard and provide for their families and loved ones, but not everyone takes their financial responsibilities seriously. In fact, about one-fifth of the population has some kind of debt that they can’t seem to pay off, and others are struggling to stay afloat financially due to unexpected expenses or other misfortunes.
Whatever your reasons may be, an experienced debt recovery agency can help you get your finances back on track through various solutions like negotiated settlements or court action if necessary. Here’s what you need to know about Debt Recovery Australia.
What Is Debt Recovery?
Debt recovery is the process of retrieving money owed by an individual or company. In Australia, there are laws and regulations in place to protect both the creditor and the debtor. The process can be lengthy and complex, but it is important to understand the basics before starting.
What About My Credit Rating?
If you’re thinking about debt recovery in Australia, one of the first things you might be wondering is how it will affect your credit rating. The good news is that debt recovery itself won’t have a negative impact on your credit rating. However, if you fail to make payments on the debts you owe, that could result in a negative mark on your credit report.
So even though the actual process of debt recovery has no direct effect on your credit rating, it can still have an indirect effect by worsening an already bad situation. Some people decide to take out new loans during their debt recovery efforts so they can pay off old ones. That might sound like a bad idea, but what some people don’t know is that taking out new loans and defaulting on them can actually ruin their chances for future loans as well as their current credit score!
So while getting out of debt sounds like a really attractive option when you’re dealing with high-interest rates and late fees, it’s best not to put yourself at risk by using another loan unless you are sure you can pay it back quickly and without penalty.
Will I Get Sued?
If you’re considering debt recovery action, the first question on your mind is probably will I get sued? The answer, unfortunately, is maybe. If the debtor has the money and chooses to fight the case, then you will have to go to court. However, if the debtor doesn’t have the money or chooses not to fight, then you probably won’t have to go to court.
How Do I Start a Debt Collection Case?
In order to start a debt collection case, you must first send a written demand for payment to the debtor. This is often called a ‘letter of demand’. If the debtor does not pay the amount specified in the letter of demand within the time limit set out in the letter (usually 21 days), you can then take further action to recover your debt. You may choose to do this by applying for a court order or commencing legal proceedings.
Don’t Get Scammed by Collection Agencies
There are a lot of collection agencies out there that will try to take advantage of you if you’re not careful. Here are some things to watch out for, they may:
- threaten legal action if you don’t pay immediately
- try to convince you that they are your only option
- say that they can get your debt reduced, but this is usually not the case
- try to charge your upfront fees
- tell you not to contact your creditors
- If they do contact your creditors, they will likely misrepresent themselves
So, what can you do if you’re being harassed by a collection agency? The best thing to do is to seek professional help from a qualified debt lawyer.
When Can I Stop Repaying Debts?
The Australian Financial Security Authority (AFSA) provides information about when you can stop repaying certain debts. In general, you can stop repaying a debt if:
- The debt is more than 5 years old and you have not made any payments within the last 12 months;
- You have made 3 or more consecutive partial payments, each of which is at least equal to the monthly minimum payment, and no full payment has been made within 12 months;
- You have made an arrangement with your creditor that is accepted by AFSA; or
- Your creditor agrees in writing that you do not have to repay the debt.
Use a Budget Planning App To Stay On Track
There are a few different ways to go about debt recovery in Australia. The most common method is through the use of a budget planning app. This type of app allows you to track your income and expenses so you can see where your money is going each month.
It also gives you the ability to set up a payment plan for your debts. This can be a great way to stay on track and get out of debt quickly.
Avoid Bad Money Habits, Forever
Australians are notoriously bad with money. In fact, nearly 60% of us have more debt than savings. If you’re one of those people, don’t worry – you’re not alone. But it’s time to start making some changes. Here are a few tips to get you started on the road to financial freedom:
- Avoid impulse purchases: These come from an emotional place and can lead to regret later on. Ask yourself Do I really need this? before you buy anything.
- Keep track of your spending: Write down every cent that goes out (and where it went) for at least a month. You might be surprised by how much is wasted each month! Be sure to check your balance at the end of each day too; many people only realize they’re broke when they go shopping or pull out their wallets.
- Practice good habits now: Money management is often something we learn as children and there’s no better time than now to instill good habits into your life that will last forever!
If you’re struggling with debt, don’t despair – there are options available like Debt Recovery Australia to help you get back on track. To seek professional advice so you can understand your rights and obligations. Once you have a plan in place, stick to it and stay positive – you can get through this with the right support.