Credit ratings and disputed debts

March 6, 2017

in Litigation & Dispute Resolution


Many people will have experienced the frustration of receiving a standard form letter from a debt collection agency purporting to demand from you payment on behalf of a company they represent in respect to a debt they allege is owing by you.

From time to time we have clients who contact us not only frustrated at the attempt to recover a disputed debt but more concerned by the debt collection agency’s threat to refer the matter to various credit collection agencies with obvious flow on impact to the client particularly when the debt is disputed.

The frustration continues in that generally any contact with the debt collection agency is through anonymous channels and meets the usual series of “walls” designed to make your experience as difficult as possible.

There are often communications that are not responded to or not even acknowledged as having been received. Phone calls are not returned.

All this leaves the client with the unfortunate situation of a debt that they do not believe they should be paying but the concern that a zealous debt collection agency will cause disruption to a credit rating. Often having that damage to the credit rating overturned can take a considerable amount of time and effort if at all.

However a recent decision of the New Zealand Privacy Commissioner may provide a prospect of some relief for people who genuinely are disputing a debt.

The Privacy Commissioner had to determine whether a person who had disputed a debt with a debt collection agency had suffered a breach of their privacy under the Privacy Act by the fact that incorrect information was disclosed by the debt collection agency to the credit rating agency.

It was accepted that the debt was genuinely disputed and as such the Privacy Commissioner took the position that the debt collection agency in disclosing the existence of the debt to the credit rating agency had not taken adequate steps to check the validity of the information including:

  1. Responding to communications in writing and by phone from the alleged debtor;
  2. Failure to check with the business that claimed the amount was owing as to whether or not the debt was genuinely in dispute.

The Privacy Commissioner made it clear that the debt collection agency had an obligation to ensure the information about the man’s case was accurate, up to date, complete and relevant.

The next time the debt collector calls and you don’t consider yourself liable for the amount in question and you can back your position up it may very well be time to raise a breach of the Privacy Act if the debt collection agency threatens to take your information to a credit rating agency.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Paul Farry
09 379 0055 or 03 477 8870


The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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