Tips for Disputing Debts

The Right to Dispute a Debt

Mar 30, 2009 Wei Yin Wong

A person has the right to dispute a debt if he does not owe the debt, has made the debt repayment or disagrees with the amount claimed.

Cases of people being contacted to make debt repayments for money they don’t owe are not uncommon. Often, these are mistakes made by creditors and debt collectors. The following are circumstances in which a person can dispute a debt.

There is never a Debt

Sometimes, being approached about a non-existent debt is a case of a mistaken identity. Showing a photo ID such as a driver’s license will often resolve the problem. However, in some cases, identity theft might have taken place and the thief uses his victim’s personal details to get loans or credit cards and run up a debt in that person’s name. Those who think they are victims of identity frauds should contact the creditor and their banks or finance companies promptly.

They should also get a copy of their credit report for information about their credit history and to make sure no fraudulent transactions have been made in their names. In Australia, a financial counselor, the Australian Financial Counseling and Credit Reform Association (AFCCRA) or the Australian Competition and Consumer Commission (ACCC) will be able to give details on how to get a credit report from the credit reporting agency.

Debt Repayment has been Made

Sometimes, people are asked to make repayments for debts that have already been settled. Dispute the debt in writing to the creditor or debt collector. Explain the real situation and attach copies of receipts or any records or proof of repayments. That’s why it’s important to keep original receipts or records of payments properly.

In the letter, ask also why the creditor or debt collector has requested for debt repayment although the amount has been repaid. If the debt collection activity continues without a good reason, lodge an official complaint to the ACCC or the Australian Securities and Investments Commission (ASIC).

Amount of Debt is Wrong

Alright, there is a debt but the amount of debt claimed is much more than the actual amount. If that’s the case, ask the creditor for an itemized statement of the account that clearly outlines and states the amount of debt owing, how the debt is calculated, how much of the debt has been repaid and any interest, charges and fees that might have come with the debt. Read the statement carefully and thoroughly. If there are fees or charges that seem unfair and unreasonable, get advice from a financial counselor.

Using a Dispute Resolution Scheme

To solve an on-going dispute, take the case to an independent tribunal or dispute resolution scheme. Independent dispute resolution schemes for the banking and finance, telecommunications, water and energy industries are provided free of charge to consumers. Again, the ACCC and ASIC are good sources of information on dispute resolution schemes.

To avoid being taken to court, refer an unresolved dispute to a dispute resolution scheme as soon as possible. This is because legal proceedings cannot begin when the case is being looked into by an independent tribunal or scheme.

No one can deny a person his right to dispute a debt if he does not owe the debt, has made the debt repayment or doesn’t agree with the amount of debt claimed. As long as he has proof that he doesn’t owe the debt, he can lodge official complaints against the creditor or debt collector if the latter continues to demand payments. He can also take an ongoing dispute to an independent dispute resolution scheme to resolve the matter.

Those who find this article useful may also like to read Understanding Debt, Legal Responsibility to Repay a Debt and Dealing with Debt Collectors.

The copyright of the article Tips for Disputing Debts in Personal Budgeting/Finance is owned by Wei Yin Wong. Permission to republish Tips for Disputing Debts in print or online must be granted by the author in writing.

Tips on how to Dispute a Debt