Your Rights & Obligations

The regulatory framework for debt collection in Australia

Debt collection in Australia is regulated at the federal level primarily through the Australian Consumer Law (ACL), which is administered by the ACCC, and through the National Credit Code for consumer credit. The ACCC and ASIC jointly publish the "Debt Collection Guideline for Collectors and Creditors" — the primary compliance framework that governs how debts may be collected.

This lesson focuses on commercial (business-to-business) debt collection, where the debtor is a business. The legal framework is somewhat less restrictive than for consumer debt — but it still applies.

Who the guideline applies to

The guideline applies to:

• Collectors — businesses collecting debts on behalf of others (agencies like Merion)
• Creditors collecting their own debts — including you, the business owner, when you personally contact your own debtors

You do not need a licence to collect your own debts. However, you must conduct that collection in accordance with the guideline. Breaching the guideline — even while acting in good faith — can expose you to complaints, investigations, and in serious cases, legal liability.

What creditors are permitted to do

You are permitted to:

• Contact a debtor by phone, email, letter, or in person (at their business) to demand payment
• Contact a debtor a reasonable number of times, at reasonable hours (generally 7:30am–9pm weekdays, 9am–9pm weekends)
• State clearly that you will take further legal or recovery action if the debt is not paid
• Charge interest and costs if your terms of trade provide for this (and if the debtor agreed to those terms)
• Refer the debt to a collection agency or solicitor
• Lodge a court claim for the amount owing
• Enforce a court judgment by garnisheeing wages or bank accounts, or by seizing assets through a court enforcement officer

What creditors cannot do

You cannot:

Harass or coerce

Contacting a debtor repeatedly in a way that is intended to wear them down, frighten them, or cause distress is harassment. The guideline is not specific about frequency limits, but excessive contact — multiple calls per day, for example — is almost certainly unlawful.

Make misleading or deceptive statements

You cannot tell a debtor that failure to pay will result in criminal prosecution (debt is a civil matter, not criminal). You cannot misrepresent the amount owing. You cannot claim to be a solicitor or a court official if you are not.

Contact at unreasonable times or places

Calling a debtor at 11pm, or repeatedly attending their home after they have asked you not to, is unlawful. For commercial debtors, contact at their registered business address during business hours is generally appropriate.

Disclose the debt to third parties without authority

Telling a debtor's customers, suppliers, or family members about the debt — except in specific legal contexts — is a serious breach. Privacy law applies.

Threaten violence or use abusive language

This is unlawful under the ACL and potentially under criminal law. It should not need to be said, but it is worth stating clearly.

Act unconscionably

Targeting a debtor who is clearly vulnerable — elderly, mentally ill, or in acute financial crisis — in a way that exploits that vulnerability is unconscionable conduct under the ACL.

How debtors can respond

A debtor may:

• Dispute the debt — claim that some or all of it is not owed, for reasons such as the goods were not delivered, the service was defective, or the amount is incorrect. A genuine dispute must be investigated. Collection activity on a disputed amount should pause while the dispute is assessed.
• Request reduced or ceased contact — a debtor can ask that you communicate only in writing, or only through a nominated representative. You should generally comply.
• Seek hardship provisions — for consumer debts, hardship provisions under the National Credit Code are mandatory. For commercial debts, there are no mandatory hardship provisions, but compassionate flexibility is generally appropriate.
• Lodge a complaint — with the ACCC, ASIC, or the Australian Financial Complaints Authority (AFCA, for some types of credit-related debts). Complaints can be investigated, and findings of unlawful conduct can result in enforceable undertakings or court orders.

Commercial debt vs consumer debt

Commercial debt — owed by a business for business purposes — is generally subject to less prescriptive regulation than consumer debt. The National Credit Code, which imposes specific protections including hardship provisions and dispute resolution obligations, applies to consumer credit, not commercial transactions.

However, the Australian Consumer Law — including the prohibition on misleading conduct, harassment, and coercion — applies to all collection activity, commercial or consumer. The ACCC/ASIC guideline covers commercial collection as well.

Compliance resources

The full ACCC/ASIC Debt Collection Guideline is available at accc.gov.au and asic.gov.au. It is written in plain English and is worth reading if you collect debts regularly.

For guidance specific to Merion's compliance posture — how we handle debtor data, our communication framework, and our regulatory obligations — visit trust.merion.com.au.

Limitation periods

Debt has a shelf life. Under Australian law, a civil claim for a debt generally must be commenced within a defined period from when the cause of action arose (typically when the debt became due and payable). The limitation period varies by state:

• Queensland, Victoria, New South Wales, ACT: 6 years (general limitation period)
• Some contract types or state-specific rules may differ

Once the limitation period expires, the debt is not extinguished — but you lose the right to bring court proceedings to enforce it. The debtor can plead limitation as a defence. This is why acting promptly matters: a debt that is three years old is recoverable; one that is seven years old may not be enforceable in court.

The Merion guide to limitation periods explains this in detail, including when the clock restarts (for example, if the debtor makes a partial payment or acknowledges the debt in writing).

Related resources

• Trust & Compliance — regulatory framework
• ACCC/ASIC guideline explained — Merion newsroom
• Limitation periods on debt in Australia
• Debt collection laws — Australia overview