Debt collection laws in Australia specify that once a debt is disputed, certain collection activities must cease until the dispute is resolved. By the way, none of this is legal advice, so do your own homework.

If a debt’s in dispute, the creditor (or the debt collection agency representing them) must pause certain collection activities until the dispute is resolved.

Well, that’s the theory, according to the National Consumer Credit Protection Act 2009 (NCCP) and the Australian Securities and Investments Commission (ASIC) guidelines.

This includes stopping any actions like phone calls, letters demanding payment, and threats of legal action (including foreclosure or garnishment).

So, according to the actions of the bank and their lawyers, the debt’s not in dispute. But they’ve failed to substantiate the debt.

No one is claiming responsibility, or authorisation, or confirmation of the debt.

But clearly it’s not in dispute, because they’re still charging interest and adding unexplained fees.

Debt Collection Laws and Disputed Debts

The law’s not clear about a disputed debt that the bank’s not able to substantiate. Should they be adding interest or fees to the debt? And does interest only accrue on a debt that is acknowledged or confirmed as valid?

Under the National Consumer Credit Protection Act 2009 (NCCP) creditors must act fairly when collecting debts. If a debt is disputed, they must refrain from continuing their collection activities (including adding interest and charges) until the dispute is resolved.

But there’s no definition of “fairly”.

Continuing to accrue interest on a disputed debt could be seen as an unfair practice.

Section 18 of the Australian Consumer Law (ACL) says businesses (including banks) must not engage in misleading or deceptive conduct. If the bank’s charging interest or fees on an unsubstantiated debt, this could be seen as an example of misleading conduct. Especially if the debt is not properly validated.

Australian Financial Complaints Authority Limited (AFCA) claims it has guidelines in place to protect consumers in debt disputes.

If the debt is under question, AFCA expects the bank to stop applying further interest or fees until the matter is resolved. In the real world, this hasn’t happened. The matter remains unresolved, and AFCA’s way to address, after sitting on it four months, is to finally decide it falls outside their jurisdiction.

Now, isnt that lucky for AFCA! They can wipe their hands clean, and carry on living a peaceful stress-free life avoiding any possible confrontation.

Bank’s Added Interest

The only interest the bank has, is the compounding interest. Bank staff have no interest in addressing any disputed debt.

While the bank’s continuing to add interest and charges to the alleged debt without providing proper evidence or addressing the dispute, they may be in breach of debt collection laws and consumer protection laws.

Since the interest is compounding, interest charges are being calculated on top of both the original debt and the accumulated interest. And so the (alleged) debt can quickly balloon.

Meantime the compounding interest on the unsubstantiated debt can penalize you financially and escalate the situation unfairly.

Especially since the bank hasn’t provided evidence that the debt is valid in the first place.

This makes it seem like they are punishing you further by increasing the financial burden even though the debt may not even exist.

In what way is charging interest on a disputed debt without evidence not an example of misleading or deceptive conduct?

Misleading Debt Collection Laws

Apparently it’s only misleading or deceptive conduct when the bank says it is. And bank staff tell AFCA that their conduct is not misleading or deceptive conduct. So that settles that issue.

Because the people at the bank always tell the whole truth. Just like the people at the UK Post Office. (Bates v Post Office).

Misleading or deceptive conduct is prohibited by the Australian Consumer Law. However, it’s really difficult for mere mortals to prove.

If the bank cannot substantiate the original debt and has not proven that the interest is valid, continuing to add interest may be illegal.

So if the bank or their lawyers continue to charge interest on an unsubstantiated debt, they could face legal penalties.

But they’ve got very deep pockets, a zillion legal eckspurts, and are in no hurry to do anything.

By paying or acknowledging the debt, you may inadvertently reset the limitation period or give the bank an argument that you accepted the debt.

If you find yourself in such a situation, it’s critical to keep records, request proof of debt, and don’t give up ensuring your rights are protected.

As you’ll learn from other posts on this website, they all use adverb-verb-babble, and state no facts.

You just have to prove their fictitious use of language, and ask them to deny that. DWM devoted his whole life to this campaign, fighting for your freedom. Now it’s your turn to learn.

We’d love to read your comments below.