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Information gathering about debt

Conversation before asking for information from our clients

When a client is seeking assistance with respect to a debt it is important that we get as much information as possible about the alleged debt and the client’s circumstances.

The tables below summarises the basic types of information we collect and why we collect this information.

Before taking instructions, you should explain to your client:

our role as their solicitor and the concept of confidentiality;
that we will not release any information without getting their consent;
that they do not have to answer any questions that make them uncomfortable; and
that they do not need to have all the information as we seek information about the alleged debt from the creditor and credit reporting agencies.

Information we ask for and why

Information about the nature and formation of debt

What we ask?	Why?
What is the type of debt?	Different legal rights and options may be available for different types of debt. A client may owe more than one type of debt.
To whom is the debt owed?	This can be relevant to understand whether the person who is claiming payment is entitled to do so. For example, the debt may have been assigned by the original creditor to another company (e.g. another credit provider or a debt collector).
What is the amount owing? What are the amounts of repayments required?	Relevant to considering the available options including whether the debt amount falls within any maximum caps for external dispute resolution with AFCA or TIO.
Does the client have copies of the contract documents?	Having a copy of the contract documents can help us to understand whether the debt asserted by the creditor is consistent with the amount being claimed and has been properly incurred.
When was the debt incurred and when was the last payment made?	Relevant to understanding whether the debt could be statute barred.
If the debt relates to a loan, what is the amount of the repayments that have been made?	If the total amount of repayments exceeds the principal amount borrowed that strengthens the client’s position for a negotiated outcome including a waiver of the debt and potential refund of the amount exceeding the principal.
Does our client dispute the debt or any part of it?	The client may be able to dispute the debt or part of it if the debt was not authorised or if amounts included in the debt such as fees and charges are not consistent with the underlying contractual arrangements or representations made to them before the contract.
How was the contract made?	We want to understand if any of the conduct of the lender/creditor provides a basis for challenging the debt or any part of it. For example, if there was an imbalance of power or lack of understanding by the client, if the creditor acted in an unconscionable manner or if our client relied on representations that were incorrect.
If the debt is secured (like a car loan) or is a lease, where are the goods located and what condition are they in?	The lender / creditor may be taking steps to take possession of secured goods. Our client may want to halt repossession while it seeks to reach a resolution. We may need to discuss with the client whether a voluntary surrender of secured property is an appropriate solution to help negotiate a mutually agreeable resolution.

Information about collection and enforcement

What we ask?	Why?
Has the creditor or debt collector commenced enforcement action? What is the nature of the debt collection activity currently underway? This could include actions such as writing to or calling the client to demand payment, initiating legal proceedings to recover the debt owing, selling the debt to a debt collector or seizing and selling any property the creditor has a security interest over.	Understanding the status of debt collection. We may be able to reduce stress on the client by seeking a suspension of debt collection activity or by asking all contact relating to debt collection to be directed to LawRight or another service provider rather than to the client. We may also be able to consider if debt collection has been excessive as a basis for complaint.
Does the client have copies of any default notices? A default notice is a formal notice or letter from a lender to a borrower informing of an overdue payment or another non-compliance with the terms of the loan and requesting the payment of the overdue amount (and/or the entire loan amount) or requesting the remedy of the non-compliance.	Having default notices can help to verify information provided by the client.
If the debt is secured (like a car loan) or is a lease, have any steps been taken to repossess the goods?	If the debt is secured, we may be able to delay or prevent repossession of secured property to secure a resolution.
If the debt relates to goods or services, have the underlying goods or services been switched off?	We may be able to assist our client to prevent discontinuation of service (or in some instances to get services reinstated).
Has the client already contacted the creditor in relation to the debt?	This may be relevant for a number of reasons, including whether there has been any fresh acknowledgement of debt (meaning that the debt may not be statute barred). If our client has raised a complaint or made a hardship request that has not been resolved our client may be able to go to proceed to raising a complaint with and industry body or ombudsmen.
Has the creditor listed a default with a credit reporting body?	While it is not always possible to avoid adverse information in our client’s credit report, if an appropriate resolution is reached it may be appropriate to ask the lender to make a notation of this in the client’s credit report or remove any associated default listing.

Information about client circumstances

What we ask?	Why?
Is the client receiving assistance from any other service providers (e.g., social worker, financial counsellor, domestic & family violence worker)?	We may work with the client’s other advisors including to gather information, discuss options or prepare a statement of financial position or supporting correspondence. Other service providers may already have been involved in some discussions about the debt.
What were the client’s financial and personal circumstances at the time when the loan was entered?	This may be relevant to a consideration of whether the client may have options to challenge the debt including because it breached basic consumer protections laws such as unconscionable conduct prohibitions or its responsible lending obligations.
What are the client’s current financial circumstances? Don’t forget to ask if the client has another debt which they are paying off and whether they are having issues under these other debt arrangements. What are the client’s current personal circumstances?	The customer is judgment proof or whether a repayment plan or hardship variation may be appropriate. There may be other debts that need to be addressed. The client may be able access any processes of the creditor to manage financial distress or hardship including any processes required by law or under an industry code.
Are the client’s financial or personal circumstances likely to change materially (adversely or positively in the foreseeable future)?	Relevant to the considerations outlined above.
Is the client currently paying any amounts by direct debit arrangements from their bank account or recurring payments from their credit card?	If the client is having significant automatic deductions from their bank account this may leave them with insufficient funds to meet their basic living expenses, e.g. to feed themselves or their family. Consideration should be given to whether any direct debit arrangements should be switched off. Consideration should also be given as to whether recurring payments being deducted from a credit card account should continue to avoid incurring further debt.

Understanding the client’s financial and personal circumstances

The confidential nature of information collection and the reasons for collection may need to be emphasised if we collect information about the client’s current financial and personal circumstances.

Collecting information about a client’s circumstances

Questions that we ask can include:

Are they receiving a Centrelink benefit? Are they working?
How long has it been since they last worked? What type of job did they have?
Do they have any assets of significant financial value (including property, land, bank deposits, jewellery or a car) which are worth more than the threshold amounts?
Do they expect to work in the future? Is it likely their income or assets will increase significantly in the coming years?
What other hardship do they experience (e.g., homelessness, mental or physical illness, substance abuse problems, family breakdown and/or family or domestic violence)?
Is the client under any type of guardianship or administration order? Is there anyone that makes decisions on their behalf?
Is the client getting help with their finances from another service provider? Have they seen a financial counsellor?
Are there any other debts that the client owes?
Are these overdue and is anyone else taking enforcement action, such as by writing to or calling the client to demand payment, initiating legal proceedings to recover the debt owing, selling the debt to a debt collector or seizing and selling any property the creditor has a security interest over? Is the client incurring BNPL, credit card or payday loans to meeting living expenses?

Depending on the initial responses to these questions and the client’s preferred course of action it may be useful to collect further information to verify the customer’s financial circumstances (e.g., to seek a waiver on basis that they are judgment proof or support an application for a variation to a credit contract or request for a repayment plan).

How to verify a client’s financial circumstances

Further information to be collected may include:

Copies of a client’s recent Centrelink income statements;
Details of their circumstances when they entered the contract related to the debt;
Details of their current living arrangements, including any circumstances of homelessness;
Details of any health concerns that may prevent them from working;
Details of any caretaking responsibilities, such as for sick family members;
Details of any experience as a victim of crime, including details of domestic or family violence;
Confirmation of a client’s history of incarceration (if applicable); and
Letters of support from a client’s caseworker and/or doctor.

We should speak with a client about accessing this information, including whether the client would prefer to collect this information themselves or if they would like us to request this information directly from third parties. A caseworker or support person may be able to provide much of this information (with the client’s consent).

Collecting information from creditors and credit reporting bodies

There are a number of mechanisms that may be available to our client to allow them to understand their debt position. When collecting information under these mechanisms we may need to check whether the credit provider will charge any fees for the provision of the information. (Sometimes credit providers are not allowed to charge fees or may chose not to if the customer is suffering financial hardship).

We also need to be careful when requesting information not to inadvertently acknowledge the existence of the debt in case the debt is statue barred.

Consumer credit

If debt is regulated consumer debt then the following provisions in the credit legislation may assist our client:

Obligation	Source of obligation and time for response
Documents and notices: The credit providers is required to give credit provider’s a copy of the credit contract; any credit related insurance contract in the credit provider’s possession; a notice previously given to the debtor, mortgagor or guarantor under the National Credit Code.	Section 185 National Credit Code. The documents must be given within 14 days if the original document is less than a year old (or otherwise within 30 days).
Statement of Amounts Owing: The credit provider must, on request, provide a statement that details any or all of the following matters: • Current balance of the customer’s account; • The amounts credited or debited during the period specified; • Any amount currently overdue and the dates that they became overdue; • Any amount currently payable and the date it becomes due. This information should be provided in writing by the credit provider if is requested in writing. The credit provider does not have to provide this information if they have already responded to a request of this nature within the previous 3 months.	Section 36 National Credit Code. The statement must be given within 14 days if the request is made for a period that is one year or less from the date the request is given (or otherwise within 30 days). Note that the credit provider is not required to respond to requests for amounts credit, debited, overdue or payable unless those amounts are currently overdue and payable (or an order of a court requires).
Payout figure: The credit provider is required to provide a statement of the amount required to pay out a credit contract on a date specified by the consumer (and if requested details of the items which make up that amount).	Section 83 National Credit Code. This statement must be given within 7 days of the request.
Responsible Lending Assessment: A credit provider is also required to give the consumer a copy of an assessment made under the responsible lending requirements when the credit (or credit limit increase) was approved. The credit provider is only required to give this if the credit contract is not entered or the credit limit is not increased. The obligation also only applies for assessment made withing the period 7 years prior to the request.	Section 132 of the NCCP Act. If the assessment was made within the last 2 years that copy of the assessment must be provided within 7 days of the request. Otherwise the assessment must be given within 21 days of the request.

These requirements are in addition to the standard requirements that require the credit provider to give copies of contract documents at the time the contract is entered, pre-contractual disclosure statements and regular periodic account statements in the required form.

Other types of debt

For debts not covered by the consumer credit laws there may be other sources of obligation to provide information. Some of these include:

Obligation	Source of obligation and timing
SPER debt: Our clients can check details of their SPER debts online via the SPER portal.	This online portal is available at SPER Portal.
Documents & statements (ABA Members): Members of the Australian Banking Association are required to provide copies of: • a contract (including Terms and Conditions, Standard Fees and Charges and interest rates); • mortgage or security; • statements of account; and • or any notice it has previously given relating to enforcement of its rights.	Section 22 Banking Code of Practice. This must be given within 30 days of the request. However the member bank does not need to respond to provide document relating to a contract that was paid out or discharged more than 2 years before the request. In addition a statement of account does not need to be given if a statement has previously been given in the last 3 months.
Documents & Statements (Subscribers to Buy Now Pay Later Code of Practice): Subscribers to this Code agree their customers to give access to the following: •any contract including terms and conditions; •any related insurance contract; •any notices we have sent you (for example, a collections notice informing you that you are behind in payment and need to make a repayment); •statements of your account for the whole period of your contract; and •a payout figure and how it was calculated.	Section 10.9 of the Code. These can be accessed via the relevant electronic platform. Where the customer cannot access these via the electronic platform then code subscribers have agreed to provide access or copies within 7 days.
Documents & Statements (COBA Members): When requested COBA member will send customers a replacement copy of any of the following documents relating to a product or facility a customer has or has had, with the member: • a loan application; • a contract (including Terms and Conditions, and details of interest rates and fees and charges); • a mortgage or other security document; • an account statement; • a notice we have previously given you about us exercising our rights (unless the notice was issued more than two years before the discharge or termination of the contract to which the notice is related); and • these obligations do not apply if the bank does not hold documents it is no longer legally required to retain (which means records more than 7 years old may not be available).	Section 10.9 of the Code. These can be accessed via the relevant electronic platform. Where the customer cannot access these via the electronic platform then code subscribers have agreed to provide access or copies within 7 days. Sections 69 and 70 of the Customer Owned Banking Code of Practice. The member bank is required to provide this information within 14 days if the original document came into existence within 1 year before the request or within 30 days for the period 1 to 7 years prior to the request. Member bank is required to advise in writing if for some reason it will take longer.
General privacy requests – personal information: Under Australian privacy laws, an entity that holds personal information about an individual must give that individual access to the information. An ‘APP entity’ is an entity to which the Privacy Act 1988 (Cth) applies, and includes an organisation (e.g. a company) or agency (e.g. a Commonwealth Government agency). The grounds on which access may be refused differ for agencies and organisations. For example, an agency can refuse to give access if required or authorised under the Freedom of Information Act. An organisation may refuse to give access if, for example, giving you access would have an unreasonable impact on the privacy of other individuals, or the request is vexatious or frivolous. Generally, if an organisation or agency refuses you access to your personal information under Australian privacy law, they must tell you in writing their reasons for refusing and how you can make a complaint. Requesting personal information is free. However, an organisation may charge for providing you access, but this charge can’t be excessive (e.g. photocopying and mailing costs). An agency cannot impose any charge.	Privacy Act, Schedule 1 Australian Privacy Principles (see APP 12 Access to personal information). An organisation must respond to a request for access to personal information within a reasonable period (usually around 30 days). An agency must respond within 30 calendar days.
General privacy requests – Credit provider: An entity may be a ‘credit provider’ for the purposes of the Privacy Act, even if credit provided is not regulated credit. If a credit provider holds ‘credit eligibility information’ about an individual, the provider must give access to the information on request by an access seeker. ‘Credit eligibility information’ includes: • Credit reporting information about the individual disclosed to a credit provider by a credit reporting body under Division 2, Part IIIA of the Privacy Act; or •Personal information that is derived from credit reporting information, that has any bearing on the individual’s credit worthiness and that is, or could be used, to establish the individual’s eligibility for consumer credit. There are exceptions to the requirement to give access, including where giving access would be unlawful, and denying access is required or authorised by or under an Australian law or a court/tribunal. If the credit provider is an agency, the provider must not charge the access seeker for the making of the request or for giving access to the information. If the credit provider is an organisation or small business, any charge for giving access to the information must not be excessive and must not apply to the making of the request. If the credit provider refuses to give access, it must give the access seeker a written notice setting out the reasons for the refusal (where possible), and advise the access seeker that they can access the relevant EDR scheme or make a complaint to the Information Commissioner.	Privacy Act, Part IIIA, section 21T. The credit provider must respond to the request within a reasonable period after the request is made (generally around 30 days).

Credit Reporting Bodies

A client may also be able to access credit information about themselves by obtaining a credit report about themselves free of charge (a consumer is entitled to receive a free credit report unless they have obtained one in the previous 3 months). ASIC has published information about how to obtain this on the MoneySmart website at Credit scores and credit reports – Moneysmart.gov.au.

Obtaining a copy of a credit report can be useful for a client because it may help them get a better understanding of their financial position including credit products they have obtained in the last 2 years, defaults on utility bills, credit cards and loans and any credit applications which they have made. Obtaining a credit report may also assist a customer to understand if they have been the subject of identity theft where credit may have been obtained in their name without their knowledge.

No footnotes

Resolving money and debt disputes

Accessing financial supports for victim-survivors

Addressing fines and infringements

Negotiating housing and tenancy concerns