A creditor has the right to chase their own debts, whether you are a business owner whose customer owes for goods, a landlord whose tenant is behind on rent, or someone who lent money to a friend. But chasing a debt has rules, and chasing it the wrong way not only fails to get the money back but can turn the creditor into the one who is complained about or sued in return.
Who the debt collection law applies to
The debt collection law protects debtors who are individuals, and it applies to lenders, including people hired to chase debts for others. A business that regularly sells on credit or on instalments to individual customers should therefore treat these rules as applying to itself.
Anyone who chases debts for others as a business must be registered under the law. A lawyer who chases a debt on behalf of a client is under the supervision of the Lawyers Council and must follow the same rules.
If the debtor is a company, the rules on the timing and frequency of contact do not apply in the same way, but other laws still apply in full.
Who you may contact
- The debtor or a person the debtor has named for contact
- Other people may be contacted only to ask how to reach the debtor. You must not say you are calling about a debt, unless that person asks.
Chasing through the debtor's workplace, supervisor or relatives in order to embarrass them is conduct the law prohibits directly.
When you may chase
Under the rules issued under the law, contacting an individual debtor in person or by phone is allowed on working days from 08.00–20.00 and on public holidays from 08.00–18.00, and the frequency of contact is also limited. If the debtor sets up the contact or agrees to it, you may contact them outside these hours.
What you must not do
- Threaten, use violence or damage the debtor's reputation, including using insulting language
- Disclose the debt to other people, for example by posting on social media, putting up notices or telling the debtor's colleagues
- Make misleading statements, for example claiming to be a lawyer or a government official when you are not, using paper that looks like a court summons, or saying assets will be seized immediately when no lawsuit has been filed
- Threaten jail over an ordinary civil debt. Failing to pay alone is not a criminal offence.
- Send documents that reveal it is debt collection, for example by writing it on an envelope or a postcard that others can read
Breaches carry both criminal and administrative penalties, and the debtor can also sue for damages.
Chasing a company: beware of defamation
A business creditor chasing a partner company often wants to warn others in the industry that the company does not pay. But announcing it in a trade association's LINE group or posting on social media carries a risk of defamation, even if the statement is true. The safer route is to demand payment in writing and, if that does not work, take legal action.
When to have a lawyer act for you
- When you have chased several times yourself and the debtor stays silent
- When you need evidence usable in court that you made a demand
- When the debt is close to becoming time-barred
- When there are signs that the debtor is transferring or selling assets
A lawyer's demand letter often works with debtors who still have money but assume the creditor will not sue, and if the matter has to go to court, asset tracing and enforcement of judgment is what turns a judgment into money.
📌 See more: Customers who do not pay for goods and services: a guide for businesses · Guide to debt collection, suing debtors and enforcement of judgment
If you have chased the debt yourself and still have not been paid, talk to our lawyers and we will help you see which way your debt should go next.
This article is general information, not legal advice on a specific matter.
