How to Dispute a Debt in Australia: Rights, Process and What Collectors Can and Can't Do

In Australia, a debtor has the right to dispute a debt — and a debt collection agency has legal obligations in how it handles that dispute. This guide explains the dispute process from both sides: what debtors can do if they believe a debt is wrong, and what creditors should expect from a compliant collections agency when a dispute is raised.

Grounds for a legitimate debt dispute

A dispute is legitimate when the debtor believes one or more of the following:

• The debt is not theirs — wrong person, identity theft, or an incorrect name match
• The amount is wrong — payments have been made that aren't reflected in the balance
• The debt is statute-barred — the limitation period has expired
• The goods or services were not delivered as agreed — a contractual dispute
• The debt has already been settled or written off
• The creditor has applied interest or fees not agreed to in the original contract

How to raise a formal dispute

A dispute should be raised in writing — this creates a record and triggers the collector's formal obligations. The written dispute should include:

• Your full name and the account or reference number
• The specific grounds for the dispute (wrong amount, not your debt, already paid, etc.)
• Any evidence you have (payment receipts, correspondence, bank statements)
• A request for verification of the debt — the creditor is required to provide evidence of the debt's validity

What a debt collector must do when a dispute is raised

Under ASIC's Regulatory Guide 96, when a dispute is formally raised, the collection agency must:

• Cease collection activity while the dispute is being investigated
• Investigate the dispute and provide a response within a reasonable timeframe
• Provide the debtor with evidence of the debt's validity if requested
• Not list the account with a credit bureau while the dispute is unresolved
• Refer the dispute to an external dispute resolution scheme (AFCA) if the debtor requests it

Where to escalate an unresolved dispute

If the collection agency fails to respond appropriately to a dispute, the debtor has several escalation options:

• AFCA (Australian Financial Complaints Authority) — for financial services-related debts
• ACCC (Australian Competition and Consumer Commission) — for misleading or deceptive conduct by the collector
• ASIC (Australian Securities and Investments Commission) — for licence-related complaints about the collector
• Fair Trading (state-based) — for consumer contract disputes
• NCAT (NSW) — for disputes about the validity of the underlying debt

What creditors should know about dispute handling

A compliant collections agency places the account on hold when a dispute is raised and investigates before proceeding. This is actually in the creditor's interest — a well-documented dispute resolution creates a stronger position if legal action is eventually required, and demonstrates that the creditor followed the correct process.