Insolvency Experts

DEBT collectors are telling broke families to eat less, quit smoking and live in cheaper homes as they recoup billions of dollars in unpaid bills.

Others are chasing money from the dead, bungling identities and abusing family and workmates in the pursuit of a growing pile of owed cash.

Counsellors fear more households will fall prey to dodgy tactics as the financial crisis deepens and more businesses sell debts to collection agencies, the Herald Sun reports.

Australian Competition and Consumer Commission chairman Graeme Samuel yesterday warned that rogues face legal action.

Collection agencies manage about $6 billion in debt owed by millions of customers. The business is tipped to expand this year with more defaults on mortgages, credit cards, loans and other bills.

Mr Samuel, speaking at the launch of the Australian Collectors and Debt Buyers Association in Melbourne, said complaints were few, but some unscrupulous methods remained.

“Debtors must be held accountable for debts but in a reasonable and constructive way that leads to repayment … and upholds their dignity,” Mr Samuel said. “What we have to remember is that debtors could be your mum, dad, son, daughter, close friend or relative.

Investigators bombard debtors with 60 million phone calls, text messages and face-to-face meetings each year.

ACDBA chief Alan Harries said the industry had improved dramatically through staff training and complaints handling.

“We know we can’t get blood out of a stone. A couple of cowboys are ruining the image for the rest of us,” Mr Harries said.

“We’re dealing with people who are already emotionally charged. Despite that, the complaint rate is only .0001 per cent.”

Collectors using physical force and undue harassment and coercion risk fines of up to $220,000 for individuals and $1.1 million for corporations.

The ACCC has received almost 5000 calls about debt collection in the past four years.

Complaints include disputes about amounts owed when debts are sold to multiple collection agencies, and people mistakenly singled out because they share a similar name, birth date and address.