{"id":227870,"date":"2024-10-16T14:39:25","date_gmt":"2024-10-16T01:39:25","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=227870"},"modified":"2024-11-18T15:39:27","modified_gmt":"2024-11-18T02:39:27","slug":"contacted-by-debt-collector","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/contacted-by-debt-collector\/","title":{"rendered":"What to Do if Your Business Has Been Contacted by a Debt Collector"},"content":{"rendered":"\n<p>Having a debt collector knock on your door is a daunting experience for any business. Whether you are a small startup or an established business, understanding how to navigate this situation is essential for maintaining your business&#8217; finances and reputation. As a business owner, you should understand your rights and obligations when faced with a debt collector to ensure you respond appropriately and protect your interests. This article will outline your rights and obligations when engaging with a debt collector, the steps you should take and potential legal risks.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Debt Collector?<\/h2>\n\n\n\n<p>A debt collector is an independent party acting as an intermediary between you and the creditor to <a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/legal-consequences-unpaid-debt\/\">recover an unpaid debt<\/a>. They are obligated to act fairly and comply with applicable laws and regulations.&nbsp;<\/p>\n\n\n\n<p>Steps for dealing with a debt collector are outlined below.&nbsp;<\/p>\n\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2023\/05\/22210201\/guide-to-resolve-business-disputes-560x792-1.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Guide to Resolving NZ Business Disputes<\/div>\n            <div class=\"body-text\">\n                <p>Commercial disputes are costly, stressful and can damage your business reputation. LegalVision\u2019s free Guide to Resolving NZ Business Disputes can help.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/guide-resolving-nz-business-disputes.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">1. Know Your Rights<\/h2>\n\n\n\n<p>Transparency and honesty are your key obligations when contacted by a debt collector. You must ensure you do not make <a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/what-is-misleading-or-deceptive-conduct-in-new-zealand\/\">false, misleading or deceptive representations<\/a> to the debt collector. It is unlawful to make such a representation and could result in further legal action.&nbsp;&nbsp;<\/p>\n\n\n\n<p>A debt collector must also treat you <a href=\"https:\/\/www.consumerprotection.govt.nz\/help-product-service\/borrowing-money\/debt-collection-repossession\">fairly and transparently<\/a> and is prohibited from misleading and deceiving you. It is unlawful for a debt collector to harass or coerce you into paying the debt. Harassment or coercion may look like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>threatening or intimating behaviour;&nbsp;<\/li>\n\n\n\n<li>frequent and unreasonable contact with you, your family and friends;<\/li>\n\n\n\n<li>contacting you at unsociable times; and<\/li>\n\n\n\n<li>misrepresenting their intentions to you.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Communication really is key when dealing with unpaid debt. It is advisable to respond to your debt collector in writing. Written correspondence creates a paper trail and can help mitigate misunderstandings.<\/p>\n<\/div>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    <script>\nvar 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aria-invalid=\"false\"  \/>\n                        <\/div><\/div><div id=\"field_2452_3\" class=\"gfield gfield--type-phone gfield--input-type-phone gf_right_half gfield--width-half gfield_contains_required field_sublabel_below gfield--no-description field_description_below field_validation_below gfield_visibility_visible\"  ><label class='gfield_label gform-field-label' for='input_2452_3'>Phone<span class=\"gfield_required\"><span class=\"gfield_required gfield_required_text\">(Required)<\/span><\/span><\/label><div class='ginput_container ginput_container_phone'><input name='input_3' id='input_2452_3' type='tel' value='' class='medium'   aria-required=\"true\" aria-invalid=\"false\"   \/><\/div><\/div><div id=\"field_2452_14\" class=\"gfield gfield--type-select gfield--input-type-select gfield--width-full custom-select gfield_contains_required field_sublabel_below gfield--no-description field_description_below field_validation_below gfield_visibility_visible\"  ><label 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Verify the Debt&nbsp;<\/h2>\n\n\n\n<p>Before doing anything else, you should verify the debt with the debt collector. You should request a written breakdown of the amount owed, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>any interest;&nbsp;<\/li>\n\n\n\n<li>fees; or&nbsp;<\/li>\n\n\n\n<li>other relevant documentation.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Once you have this information, check it against your records to ensure it is accurate.&nbsp;<\/p>\n\n\n\n<p>One thing to look out for is the debt date. If the debt is older than six years, it may no longer be enforceable under limitation laws. In this case, you should contact a lawyer to confirm whether limitations apply.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">3. Consider Your Payment Options<\/h2>\n\n\n\n<p>Where the debt is valid, you should consider your payment options carefully. If you do not dispute the debt and can make the payment, doing so in the first instance is strongly recommended. In some cases where you may not be in a position to pay the full amount but can do so soon, you may want to initiate negotiations for a payment plan. When you and your creditor agree on a payment plan, it can effectively resolve the unpaid debt and protect your business relationship.&nbsp;<\/p>\n\n\n\n<p>If you cannot pay the debt because your business is about to be <a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/bankruptcy-insolvency-work\/\">liquidated or bankrupt<\/a>, you must communicate that to the debt collector. If you believe the debt is disputed, clearly outline this to the debt collector and state your reasons. You should also seek legal advice.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">4. Legal Considerations&nbsp;<\/h2>\n\n\n\n<p>If you fail to pay the unpaid debt, you risk legal proceedings being brought against you and your business, including a statutory demand. If done correctly and lawfully, this demand obligates you to either:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>pay within 15 working days;<\/li>\n\n\n\n<li>reach an agreement; or&nbsp;<\/li>\n\n\n\n<li>set aside the demand.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>However, if you fail to do so, liquidation of your business may be initiated. It is important you take all necessary steps to avoid a statutory demand being issued against your business.&nbsp;<\/p>\n\n\n\n<p>You should consult a lawyer regarding your debt to discuss your business&#8217;s best options and to guide you on an appropriate path forward. If you receive a statutory demand, you should contact your lawyer immediately.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Complaint Services&nbsp;<\/h3>\n\n\n\n<p>Despite debt collectors&#8217; and creditors&#8217; legal obligations to your business, some may engage in improper practices. If you encounter issues with a debt collector, external complaint services are available to assist you.<\/p>\n\n\n\n<p>The privacy commissioner can address complaints if the debt collector has breached your privacy or caused significant harm. For instance, contacting your family about your business debt without permission may constitute a privacy breach. Significant harm may include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>violating your rights; or<\/li>\n\n\n\n<li>causing severe embarrassment, hurt feelings or loss of dignity.&nbsp;<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--star\">\n    <p>The Commerce Commission can receive complaints about breaches of the <em>Fair Trading Act 1986<\/em> or the <em>Credit Contracts and Consumer Finance Act 2003<\/em>. These complaints may concern debt collectors&#8217; misleading or deceitful conduct, harassment, or coercion.<\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">5. Take Preventative Measures&nbsp;<\/h2>\n\n\n\n<p>You should consider implementing preventative measures to avoid future unpaid debts. Management practices where you regularly review your accounts and invoices will help you stay on top of comings and goings. Additionally, addressing potential cash flow issues early will help prevent debts from escalating. If you know an invoice will go unpaid, contact the creditor and let them know you acknowledge the amount is due and are working on paying it.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways&nbsp;<\/h2>\n\n\n\n<p>Debt collection can be stressful, but understanding your rights and obligations is key to navigating this process effectively. When a debt collector contacts you, you should:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>verify the debt;<\/li>\n\n\n\n<li>consider your options, including making the full payment or negotiating a payment plan;&nbsp;<\/li>\n\n\n\n<li>be transparent and honest about where your business stands with this debt; and<\/li>\n\n\n\n<li>understand the potential risks should you not pay the debt.&nbsp;<\/li>\n<\/ol>\n\n\n\n<p>If you are dealing with a debt collector, our experienced <a href=\"https:\/\/legalvision.co.nz\/services\/disputes-litigation\/\">disputes lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions&nbsp;<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1729042400061\"><strong class=\"schema-faq-question\"><strong>Can a debt collector take legal action against my business?<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, if you fail to pay or reach an agreement, a debt collector can initiate legal proceedings. This might include issuing a statutory demand, which gives your business 15 working days to pay or face potential liquidation.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1729042414459\"><strong class=\"schema-faq-question\"><strong>What if I cannot pay the total amount immediately?<\/strong><\/strong> <p class=\"schema-faq-answer\">If you cannot pay the total amount, communicate this to the debt collector. You may be able to negotiate a payment plan that fits your cash flow. Be honest about your financial situation and propose a realistic repayment schedule. If agreed upon, ensure you get the payment plan in writing.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"ed19fd34f0\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/227870\" \/>            <input value=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/contacted-by-debt-collector\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"What to Do if Your Business Has Been Contacted by a Debt Collector\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Having a debt collector knock on your door is a daunting experience for any business. Whether you are a small startup or an established business, understanding how to navigate this situation is essential for maintaining your business&#8217; finances and reputation. As a business owner, you should understand your rights and obligations when faced with a<a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/contacted-by-debt-collector\/\">Continue reading <span class=\"sr-only\">&#8220;What to Do if Your Business Has Been Contacted by a Debt Collector&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13518,"featured_media":215461,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[9],"tags":[25,145,1453,2203],"class_list":["post-227870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-disputes-and-litigation","tag-small-business","tag-disputes","tag-debt-collector","tag-unpaid-debt"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Have You Been Contacted by a Debt Collector? 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