The Letter of Demand
Debtors who have fallen behind in payments will generally receive one or more letters or notices from the creditor and/or from a debt collection agency demanding payment.
These letters of demand will usually state that unless the debtor pays by a certain date, court action will be taken.
Do not confuse these letters with court documents. They may look like court documents but they are not. If in doubt, seek legal advice.
Debt collection agencies have to be licensed under Section 4 of the Security and Investigations Agents Act 2002 (Tas) and must comply with a code of conduct (Section 38A, Security and Investigations Agents Act 2002 (Tas)).
An agency can have its licence suspended or lose its licence if it engages in unsavoury or illegal conduct which shows that the operator of the agency is not a suitable person to hold a licence (Sections 15 and 16, Security and Investigation Agents Act).
Conduct such as sending letters of demand that look like court documents may demonstrate such unsuitability.
Court action to revoke a debt collector’s licence may be initiated following the lodging of a complaint with the police, or with the Commissioner for Corporate Affairs through the Office of Consumer Affairs and Fair Trading.
If sufficient complaints are received by the police they may commence such an action. In any case before a licence is renewed the Commissioner is to take into account any information or matter that they consider relevant (Section 8(3), Security and Investigations Agents Act).
In its letter of demand a debt collection agency will often add to the debt a fee called its ’costs’.
Generally this fee need not be paid. It is illegal for a debt collection agency to charge the debtor a fee for collection of the debt, or even attempt to do so, unless the debtor is legally liable to the creditor for that fee, for example if the agreement provides for payment of collection costs.
Therefore the police should be told if a debt collection agency has made a demand for payment of its costs. It is an offence for which an agency or debt collector may be fined if convicted (Section 35, Security and Investigations Agents Act).
It may also be conduct showing the person is unsuitable to hold a licence, in which case it could be suspended or revoked.
Before taking any of the legal steps above it is worth getting legal advice which contemplates your particular circumstances.