What can a debt collector legally do?

What Can A Debt Collector Legally Do?

If you are having credit problems, it is important to know what creditors and collection agencies may and may not do to collect debts.

The state Consumer Protection Act prohibits some debt collection practices. When dealing directly with you, creditors and collection agencies may not:

Phone you more than twice for each debt in each 7 day period at home, or call you more than twice for each debt in each 30 day period at someplace that is not your home.  Collection agencies know this and under no circumstances should they breach this.

Call you without identifying both the name of the company you owe money too and the name and company of the person calling.

Call you at times other than your normal waking hours. If your waking hours are unknown, then the creditor or collector may only call between 8:00 a.m. and 9:00 p.m.

Visit your home at times other than those mentioned above.


A debt collector cannot visit more than once in any 30 day period for each debt, unless you give permission for additional visits.

Cause you to be charged for long distance calls (or other similar costs).

Call you at your place of work if you requested that they not call you there. Your oral request is valid for only 10 days, unless you confirm it in writing within 7 days of making that request. Written request are valid until you write to the collector removing the restriction.

Contact you directly, if you have told the creditor or collection agency to only contact your attorney or representative.

Falsely threaten to take legal action. They may still threaten to take legal action without prejudice.

Use profane or obscene language that would be considered harrassment..

Additionally, creditors and collection agencies may not:

Reveal to anyone (including friends, neighbors, relatives, or employers) about your debt.

Send collection notices in a way that openly indicates or implies that you owe a debt (for example, using postcards or descriptive return addresses.)

Federal law provides some additional protections against debt collection agencies. (This law does not apply to creditors):

Collectors must verify your debt. Collectors must stop calling you if, within 30 days after you are first contacted, you send the agency a letter indicating that you do not owe the debt. They can only renew their collection activities if you are sent proof of the debt.

You may stop a debt collector from contacting you. Write a letter to the collector telling them to stop contacting you. Once the collection agency receives your letter, they may not contact you again except to say there will be no further contact. They also may contact you to inform you if they are going to take some specific action, such as suing you.

Related Videos

Yvonne Lim, 23 and sweet looking, is someone you would not want knocking at your door. Armed with men of burly physique and stern demeanour, Yvonne is …
Understanding the “Statute of Limitations on Debt Collection”
Today’s lesson is on the “statute of limitation for debt collection”. This brief video will give you a good understanding on the statute of limitations and how long …
Dealing with third party debt collection companies
Regarding a dispute over administration charges that is currently ongoing with FedEx. These clowns – Control Account – send me a letter chasing payment – NO …
Debt Collection Martial Art Movie – Flying Uwe
Kurzfilm mit mir und dem NDTeam Starring: Uwe Schüder (Flying Uwe), Timo Schümann, Simon Csengeri, Cliff Amador, Marina Bartels (Mina) and Khoi Chau …
Dispatches U.K – Undercover Debt Collector. The truth about debt collection agencies. Part 1
Exposing the illegal, dirty tricks pulled by the 20000+ debt recovery agencies in the U.K.

An example of how not to collect a debt!

Source: http://empirenews.net/bin-laden-shooter-rob-oneill-mistakenly-attacked-by-street-thugs-seeking-to-collect-debt-from-neighbor/

Ex US Navy SEAL, Robert O’Neill who shot and killed Osama Bin Laden had his home mistakenly broken into by 5 street thungs who were attempting to collect a debt. The intended target was Robert O’Neill’s neighbor who owed the thugs $50 for an unpaid bag of marijuana.

The ex Navy SEAL broke all of their wrists and dislocated their knees and was himself unharmed.

Once the invading thugs were immobilized he called the police and put on a coffee.

The lessons here: Double check the details of your intended target. Mistakes can be costly.

How to choose a debt collector

Financial crisis has made the current market extra volatile. Business strategies are therefore crucial for small and medium corporations. Reinvention of these corporations is needed to fit them in the highly economical market. This makes them spend a lot in marketing and branding. This condition has put several small and medium companies in debts in NZ. It’s not easy, but it’s important to come up with a debt recovery system that automatically gives results on debt information. Minimising or eliminating debts requires support from a team of the appropriate experienced personnel. Consulting a debt collection agency is a significant step in a business. However, one needs to consider a number of factors while choosing a debt collection agency to ensure selection of an effective agency.

Overview of a debt collection agency:-

A company or firm may have a large number of entities owing it debts. Collecting all the debts may be time consuming and ineffective for the company. Therefore a debt collection agency is of importance. This is a firm that collects debts from all the entities owing a company on behalf of the company. It can serve many companies at ones. There are two types of debt agencies. One is a first party agency which is part or branch of the company dedicated for debt collection on behalf of the whole company. The other one is a third party agency that is an alien firm collecting debts for the company. It retains some percentage of the debts paid as the charges.

Factors to consider while choosing a debt collection agency:-

  • Authority is one of the factors to consider. Well, many agencies may be available around the company or online. However, choosing one needs consideration of the law. The agency should be authorised to operate within a country or a region. You need to understand the conditions set for such an agency and ensure that it’s licensed to offer such services.
  • Relevancy of the debt collection agency to your business is another factor to consider. An agency that deals with businesses related to yours will be the most effective. That’s why first party agencies are preferable for large companies.
  • You should also consider cost and reliability. You may prefer low cost agencies to expensive ones, but the issue of recovery comes in. If an agency is cheap but assures high recovery, then choose it. Otherwise, go for the high ratio charging collectors that are more reliable.
  • Mode of operation may differ from one debt collector to another. Choose an agency that will effectively serve you and retain your customers. Fair and lawful debt collection criteria are a bit promising and maintain a company’s reputation to its esteemed customers.
  • Offer the contract to an accessible agency; the one that you can closely work with. Cooperation with your agency is vital. It ensures reliability and efficiency. An agency should be responsive to your queries and informative about the progress and their debt collection It must be responsible for a process re-run in case you still need some debt recovery at the end of the contract. Reassign your contract to the same agency if you are fully satisfied with its services.

In conclusion, huge businesses have burdens of activities to carry out on routine basis. Most of them are sequential and are carried out within the business premises. Debt collection, despite being among the responsibilities, can’t be effectively accomplished by the business personnel. This is because debtors are outsiders from different locations. As a business owner, you therefore need to consult a debt collection agency to accomplish this mission for you.

Things to consider when looking for debt collection services

Whether you are a small scale business person, a company owner or a manager, debtors may be a friendly threat to you. Regardless of how effective your management is, a large number of debtors may not be very easy to manage. Debt collection may be delayed, declined or even poorly done. All these will always pull back your business performance. Both management and strategic planning will serve as challenges to you. However, there are debt collection agencies that can help you solve these problems. The services you can receive from different agencies may differ in quality, depending on a number of factors which should be considered when choosing a debt collection agency. These include:


When selecting a debt collection agency, consider how it’s perceived by other related businesses which have received its services earlier. Gather information about the agency even from the society, if possible. Both factual and optimistic ideas about the agency will enable you conclude on its reliability. Experience being the best teacher, the prior served companies and corporations hold the reputation of the agency. Contact them and make a wise decision.

Agency’s legitimacy

Ensure that an agency is in line with the prevailing constitutional regulations before you assign it your contract. Different states have different regulations for debt recovery processes. Avoid risks by selecting a licensed agency.

Ensure that the agency has insurance

Some agencies may apply unfriendly methods when collecting debts from debtors. In such cases, the debtor may decide to sue both of you. If in a court of law you happen to have hired the wrong agency, both you and your agency will face the charges. Secure a proof of insurance from your agency before you assign it your project. It’s known as omissions and errors insurance, held by such agencies for protection.


Remember that hiring a debt collection agency to collect debt for you is the last option you have in dealing with your debtors. The process makes you lose by paying the agency. Therefore, on the basis of cost, select an agency that charges the least but is reliable in debt recovery. Chose the one where you will pay a flat fee or a small pre-collection fee. If this is ineffective, choose the one with contingency costs which is nothing but a percentage paid to the agency only after a collection is made.

Availability of skip tracing services

Some debtors avoid giving their physical addresses. Skip tracing however helps the debt collector to locate them. This is accomplished by access to many databases that enable them to reach the debtors. This will be possible if you have been contacting them professionally.


Select an agency that matches your business in terms of size. A small business will effectively work with a small debt collection agency. You won’t incur a lot of expenses. On the other hand, a large company will require a large debt collection agency. For example a company with clients scattered all over the world will only work well with an agency that can access debtors across the globe.

To conclude, it’s evident that debt collection is one of the challenges faced by business owners and company managers. It’s wastage of time and resources for a company to collect all the debts from its clients. However, using debt collection agencies makes it easier. There are many such agencies across the world. They have differences in terms of quality of service, reliability and responsibility. Therefore to choose the best, you have to consider the highlighted factors.

The debt collection process in New Zealand

If a business has to maintain a steady cash-flow, maximize income and earn good profit margins, it needs reliable credit management and debt collection systems and providers. Late payments can negatively impact a company’s financial status and its ability to remain solvent.

There are debt collection agencies that can assist companies to handle late paying client. Specifically, these agencies collect debts on behalf of the companies for a fee which can greatly vary depending on the nature of the debt.

Depending on the size of your business, you can choose a debt collection agency that can work for you to help recover any outstanding money owed to your business. These agencies employ several methods to communicate with clients. Examples of these methods are: telephone calls, reminder reports, emails and letters. Clients who ignore these friendly means of debt collection can then face further legal consequences such as applications to court to seize property, freeze assets or initiate liquidation proceedings against a company or bankruptcy against an individuals.

However, to avoid clashing with your clients, initial formal credit management policies are necessary. This reduces the risk of delayed payments and company cash-flow difficulties and ensures proper debt recovery. Such policies include thorough clients’ credit checks, adherence to credit agreement and active invoice management. These are assurance to timely credit payment once a deal has been made.

In New Zealand, debt collection by agencies is governed by the Financial Conduct Authority. FCA outlines the guidelines and principles on how these agencies collect funds. When assessing debt collection in NZ, FCA examines the agencies’ compliance with the laid down strategies. It may not necessarily be constitutional, but FCA offers reasonable guidelines for debt collection and target to minimize unfair practices. For example, claims to be acting in an authorised and legal capacity as a court-appointed factor, harassing clients or insisting on overpayment. For debt recovery services, working within the limits of these guidelines is essential to ensure that the agency is worthy of obtaining a license for debt collection, recovery and management.

Debt collection agencies in NZ work in either of the following two techniques: The original corporation sells the debt to a collection service fairly because they are no longer ready to deal with the debtors’ accounts. The debt is sold cheaper than the actual debt owed. The agency retains the full amount recovered from the borrower. This can sometimes be called “debt factoring” or “invoice factoring” – Basically a company sells their invoices to a third party for a amount that is less than the face value on the invoice.

The difference between the payment made to the business by the debt collector and what is recovered from the debtor is the debt collector’s profit.

The other debt collection method is whereby the debt collector recovers the whole amount from the creditor, pays a large part of it to the business and retains a percentage as the payment. This percentage can range for 15-50% and there can also be fixed fees and minimum commission amounts payable.

Applying any of these methods, the company can achieve effective credit management. Operating within the rules set by Financial Conduct Authority, these agencies offer cost-effective methods of managing a company’s debt, maintaining high profit and generating steady cash-flow which is vital for business success.