Released every month our debt collection blog contains news, stories and tips to keep you informed.
As we adapt to this fast-changing situation surrounding COVID-19, we have made the following amendments to our service. Will continue to review this situation and take pro-active steps where necessary in these unprecedented times.
LCOLLECT (COMMISSION / CONTINGENT ACCOUNTS)
LCollect is continuing to supply our collection service, with the below changes.
Hardship or Financial Difficulty
Where it is expressed or implied in our contact that someone is experiencing financial difficulty, a 6-month moratorium with a review at 3 months will be granted without the need to supply a statement of financial position or supporting documentation. Please contact us if you do not want this applied to your accounts.
Services Suspended Temporarily
Unless you otherwise instruct us, we will also temporarily cease issuing the following services on accounts fully outsourced to LCollect on a commission basis:
Serious consideration has been given to this decision however we have elected to postpone face-to-face contact for the safety of the wider community as well as our agents. We have been informed by a number of clients of differing policies and approaches that we will action accordingly. On other files, we may be in contact with you prior to taking further action where we deem necessary to collect an account. Files where face-to-face contact is already occurring will be monitored closely.
COLLECTION LAW PARTNERS (FEE ACCOUNTS)
The Law Firm will continue to provide all services, and will follow our client’s policies and instructions. Be informed that we are aware that some process servers may no longer be providing face to face services at this time. This decision is understood and respected. There may be restrictions on other services available through the various Courts.
We will keep you informed on a matter by matter basis.
We are monitoring the COVID-19 situation closely and are following the advice being provided by NSW Health and the Australian Government and continue to work out of our Sydney office.
In the event that external issues begin to impact upon our operations, such as mandatory self-isolation, we will activate our business continuity plan which will involve our staff working out of secure remote locations to ensure we meet our service commitments to our clients.
When working remotely our staff have the very same resources that are available in an office environment including the ability to make and receive calls, call recording, email, mail facilities.
If you have any questions or concerns regarding our response to this unprecedented event please speak with us on (02) 8923-1600.
If you have worked in the debt collection industry for any period of time you would have spoken with people who believe that bankruptcy is the only way out of a financial mess.
While this may be the case for some people, at times they may not be fully educated about the consequences of taking this path with an emotional decision being made rather than a rational decision. We are not implying that it is your role to talk someone out of bankruptcy, however, always ask the person whether or not they understand the consequences of their decision. So what are these consequences?
Bankruptcy Can Impact Income and Employment
A person earning over the indexed amounts may be required to make compulsory payments to the Trustee. The base income threshold amount for a person with no dependents is currently $57,866.90 with the index rising to $78,698.98 for person supporting over 4 dependents. Compulsory payments are calculated by the Trustee and can be paid to creditors to reduce their liability.
While bankruptcy does not stop someone from being employed there are professions that impose restrictions and licence conditions on bankrupts. Some professions do not allow the management of Trust Accounts such as those held by accountants or Solicitors by a bankrupt nor can a bankrupt be a Director of a company, manage a company or hold certain public positions.
Not All Debts Are Released
Most unsecured debt are covered once a person files for bankruptcy however not all. Some exceptions include Child Support, HECS and HELP debts, penalties imposed by Courts and fines. Debts owing to Centrelink, the ATO, Victims of Crime and some toll fines may not be covered and enquiries should be made by the bankrupt to see if the bankruptcy covers them.
A Life on the National Personal Insolvency Index (NPII)
As a bankruptcy a record is maintained on the NPII for life. This is a searchable public register that records insolvency proceedings in Australia.
Obtaining Future Credit
Some creditors ask if a person has ever been bankrupt. This must be disclosed at the time of the application. Credit Reporting Bodies also keep a record of personal insolency for 5 years from the date of bankruptcy or 2 years from when the bankruptcy is discharged by law (whichever is later).
The indexed amounts pertaining to credit limits allow a bankrupt to apply for credit, such as goods or services on credit, hire purchase, leases, etc up to $5,778. Amounts over and above this the bankrupt must disclose they are bankrupt to the organisation providing them with credit.
Restricted Overseas Travel
Planning an overseas holiday? As a bankrupt permission must be sought from the Trustee to travel overseas. It is an offence to travel overseas without obtaining written consent from the Trustee.
Assets Can Be Sold
The Trustee in Bankruptcy may elect to sell assets, including real property, in which to satisfy creditors. Any assets must be declared to the Trustee and these assets must not be disposed of by the bankrupt.
Discharge of Bankruptcy
Bankruptcy usually last for 3 years and 1 day from the date the person files for bankruptcy or, where a creditor commences the bankruptcy proceedings, 3 years and 1 day from the date the Statement of Affairs is filed. In some cases a Trustee may apply to the Court to extend the automatic date of discharge for up to a period of 8 years.
This is not an exhaustive list of the restrictions that a Trustee may impose on a bankrupt. This list has been provided in good faith so that you may better educate people you come across in your day-to-day role about the possible consequences of their decision.
If you have any questions we urge you to speak with a qualified legal practitioner, Trustee or Collection Law Partners.
Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.
As most of our subscribers are aware we have released our newsletter every month for the last 10 years and have released over 550 free articles covering debt collection news around the world as well as debt collection tips and advice.
We have decided that our blog and newsletter will now be released quarterly following this issue.
We hope that this change will result in more feature packed articles and news. If there are industry specific changes that we believe will have an impact on our industry we will release this information via our social networking channels on Facebook and LinkedIn.
We thank you for your continued support and loyalty and look forward to continuing to provide this free service.
A local council in Perth has recently waived in excess of $760,000 in debt because staff overlooked referring the debts to their debt collection agency.
The Town of Victoria Park found that 11,148 unpaid fines, mainly from parking infringements, had failed to be outsourced for collection after a clerical error was discovered. Of those discovered as being unpaid 8,000 were uncollectable due to the limitation period expiring. With the oversight identified council wrote to the 1,000 of the larger unpaid debts demanding payment however only 49 were paid returning the council $6,617.
With council estimating that approximately $3,000 had been spent in attempting to recover the debts, which did not account for staff time, Councillors made the decision not to pursue the debt and agreed to write-off $767,199.13 at the June council meeting. Cr Karen Vernon stated that the unrecoverable debt was "disappointing on so many levels" as the money could have been utilised to make a difference to significant community projects or to pay down further debt owed by the council. Town of Victoria Park would not confirm to the Southern Gazette if any council staff were dismissed over the error.
In a statement to the media, Victoria Park Chief Executive Anthony Vulete said that their debt collection policy and practices were being reviewed and accepted that the situation was an administrative failure.
Debtors in the UK are to benefit from a new scheme where they will be provided 60 days grace from debt collectors and Bailiffs.
In an article that appeared in The Sun, people who are struggling with significant debt to local government bodies, such as tax arrears, personal tax debts and benefit overpayments, will have their debts frozen with all enforcement action also stopped. The scheme, which is due to be launched in 2021, is designed to provide the financially disadvantaged with time to find long-term solutions to their financial problems. During the "breathing space" period, which is what the scheme is being called, those debtors must work with professional financial counsellors to reach solutions to get back on track with their repayments.
The "breathing space" program also includes a "statutory debt repayment plan" which allows those in debt to repay debt over a more manageable period and could see monthly repayments adjust according to their disposable income.
Debt charity, StepChange, revealed in April of this year that 657,000 people had sought their assistance in 2018 and applauded the moves by HM Treasury.
ZDNET is reporting that the debt collection agency, American Medical Collection Agency (AMCA), has filed for bankruptcy protection following a major data breach.
The breach, which is estimated to have occured from August 2018 to March 2019, resulted in the theft of information from corporate clients which included Sunrise Laboratories, BioReference Laboratories, LabCorp and Quest Diagnostics. The companies used a portal provided by AMCA to bill their medical customers which was later found to have been stolen and advertised for sale in dark web forums.
Following the disclosure of the breach multiple class-actions werre filed against not only AMCA but also the corporate clients with victims claiming that there were unnecessary delays in informing victims. According to the Chapter 11 declaration that was filed, AMCA first became aware of the breach when a number of credit cards were linked to fraudulent transactions. While the portal was closed and an investigation launched, the data breach caused AMCA to lose a number of clients and a massive reduction in business. ACMA has since been unable to determine exactly what data has been compromised and has been forced to absorb the cost in informing several million people by mail that their data may have been stolen. It is estimated that this alone has cost ACMA US$3.8 million forcing AMCA to take out a loan just to meet this expense.
AMCA will continue trading at this point in time as they seek to pay off their Creditors.
The Australian Financial Complaints Authority (AFCA) has recently released a snapshot of statistics following their first 5 months of operation.
The release of these statistics follows an article, 'Appalling Treatment': Bank Customers Making 5,900 Complaints a Month in the Sydney Morning Herald where the Chair of AFCA, Helen Coonan said in a speech allegedly seen by The Sydney Morning Herald and The Age, "Poor culture in financial institutions has been identified as the main culprit that permitted a slew of bad practices, appalling treatment of consumers and small businesses, and in many cases arrogant indifference to regulatory and compliance risk. Now almost seven months old, AFCA is playing an important part in restoring shattered community trust and confidence in the financial services sector."
The statistics show that between 01/11/0218 and 31/03/2019 AFCA -