I owe money, but do debt collectors have to chase so hard?

Thursday, 17 January 2019

A budget adviser may be able to advocate on your behalf.

I have a debt of approximately $700 that I owe to [debt recovery agency] EC Credit Control. I don't know exactly how much I owe because they have not sent me a recent update even though I asked them last month for a balance of my account. I pay $35 per fortnight. At first they were happy and agreeable but lately, their attitude has changed to one of frustration that I am not paying more and I feel harassed over this debt. I have never missed a payment, nor are any of my payments late. The company says that my account needs to be reviewed every three months, that I need to pay more than the accepted amount of $35 per fortnight because otherwise, it will take too long to pay off and if I don't agree they will take me to court which will mean I will have to pay more for the costs incurred. I cannot pay more than I already am. I don't understand why they will take me to court if I am not late or overdue. I do not understand why my account needs to be reviewed, sometimes I can get as many as five phone calls and messages to contact the account manager. I know I owe money but is all this reasonable?

Financial coach Shula Newland says this is typical of debt collection agencies.

'Mostly it is just threats to get her to pay more and it's unlikely that any court action would be taken.'

The three-monthly review is normal, she says. 'It's to see whether there has been any changes in financial situation. This could be for better or worse. If she hasn't had any changes then there's no reason for it to be reviewed.'

* Australian 'vulture funds' circle Kiwi debt market

* Commerce Commission says some debt collectors may be inflating sums owed to them**

Kate Henderson, a financial mentor at MoneyTalks, recommends asking some questions.

'Consider making an appointment to see a financial mentor at a free local budgeting service. They will be able to advocate for you with EC Credit Control, and back this up with a detailed budget, showing the state of your finances, and your difficulty in paying the higher amount. It would be surprising if a case like this needed to be settled in the courts.'

Debt collectors have their own obligations, too. They cannot use physical force, pressure or unreasonably harass or hassle you and your family. A debt collector should only contact you when it is necessary and for a reasonable purpose.

They cannot mislead you or deceive you about the debt, or threaten legal action without grounds to do so.

EC Credit Control chief executive Dave Wilson said his firm would strive to proactively work with customers who found themselves in financial difficulties.

'It is our desire to have a positive outcome and work with customers to ensure any repayment arrangements are sustainable and doesn't place them in a more difficult financial position.

'We realise customers financial positions can change very quickly so it is our challenge to work closely with them by having an open communication process to ensure customers feel comfortable making contact with us rather than putting their head in the sand.

'I would be keen to understand more to see if we have have failed to met our performance standards and if there are any internal changes or additional training we need to implement.'

We purchased a Parmco oven when we built our new home in 2012. In that time the switch mechanism that controls bake, grill etc had broken twice meaning our oven won't heat on certain settings. The first time it broke it was covered by the warranty but this year (2018) when it broke they wouldn't repair it. It was repaired in 2015 originally so at this stage has broken every three years. Is it reasonable to expect our oven should have the part replaced at no cost to us?

Consumer NZ head of research Jessica Wilson says you wouldn't expect a key component of an oven to fail twice in just six years. 'Repairs should be covered under the Consumer Guarantees Act.'

Do you have a consumer or personal finance question you'd like answered? Email susan.edmunds@stuff.co.nz