Debt Collection Rights in New Zealand: What Collectors Can and Cannot Do
Debt collectors in New Zealand must deal with you honestly and cannot mislead or harass you, mainly under the Fair Trading Act 1986. This page explains what a collector can and cannot do, how to dispute a debt you do not believe you owe, and how the Limitation Act 2010 affects very old debts.
This is general information about New Zealand consumer law, not legal advice or financial advice, and it is not a suggestion to avoid paying a debt you genuinely owe. For your own situation, consult a lawyer, a free financial mentor, or your local Community Law centre.
What a debt collector is allowed to do
A debt collector, whether it is the original creditor or an agency the debt has been passed or sold to, can contact you to ask for payment, to discuss or review a repayment plan, or to explain the consequences of not paying. Where the debt comes from a consumer credit contract, such as a loan or credit card, the lender also has separate obligations under the Credit Contracts and Consumer Finance Act 2003, including around responsible lending and disclosure.
A collector can only add fees to what you owe if those fees were disclosed to you upfront, and can only charge interest or late fees if they were agreed to in the original contract. Undisclosed or invented charges are not something you have to pay simply because a collector says so.
What a debt collector must not do
The Fair Trading Act 1986 makes it unlawful for a debt collector to mislead or deceive you. The Commerce Commission has taken action against collectors for conduct such as falsely claiming court proceedings had already been filed when they had not, falsely threatening to lodge a credit default when there was no legal right to do so, telling someone they cannot dispute a debt, and demanding a disputed amount be paid before the dispute could even be raised. In one recent case, a collection agency and its director were fined and ordered to pay reparation for misleading debtors in these kinds of ways.
Separately, Consumer Protection guidance sets out that a debt collector must not use physical force, pressure, or unreasonable harassment, must not enter a home or garage by force, must not contact you unreasonably often or at times you have specifically asked them not to, must not take advantage of a vulnerability or disability, and must not disclose details of your debt to other people, such as your employer or family, without your permission.
If you do not think you owe the debt
If you believe a debt is wrong, whether because you do not owe it at all, the amount is incorrect, or it relates to goods or services you never received, put your dispute in writing to the creditor or collector as soon as you become aware of it. Explain clearly why you are disputing it, and keep a copy of everything you send along with notes of any calls, including the date, time, and who you spoke to.
According to Consumer Protection guidance, debt collection and repossession action should generally stop while a genuine dispute like this is being resolved. If the debt has been listed with a credit reporting agency, you can ask for it to be removed or flagged as disputed while the matter is unresolved.
Old debts and the Limitation Act 2010
Under the Limitation Act 2010, a creditor generally has 6 years to bring a new court claim to recover most debts, running from when the money became due or from the date of the most recent payment or written acknowledgement. If that period passes without a new payment, a written acknowledgement of the debt, or a court claim being filed, the debt is often described as statute-barred, meaning the creditor would generally struggle to win a new court claim to enforce it.
Making even a part payment toward an old debt, or acknowledging it in writing, can start a fresh 6-year period from that point. This is a genuine risk for anyone who thinks a debt might be time-barred: engaging with it in the wrong way can reset the clock.
A time-barred debt is not automatically cancelled, and this is not a suggestion that you can ignore a debt you genuinely owe. Limitation law has exceptions and can turn on specific dates and facts, so if you are dealing with a debt that may be very old, get advice from a lawyer or a free financial mentor before deciding how to respond.
Where to get help
Free, confidential help is available from a financial mentor through MoneyTalks (0800 345 123), which can also connect you with a local budgeting service. If you think a collector has broken the Fair Trading Act, you can complain to the Commerce Commission. If a genuine dispute about goods, services, or an amount owed cannot be resolved directly and falls within its limit, the Disputes Tribunal is a low-cost option, though it is not a debt collection service and will not help simply because a debt has gone unpaid with no real dispute about it.
Related New Zealand consumer topics
For the wider rules on misleading conduct that also apply to debt collectors, see the Fair Trading Act. For how small claims and disputes are resolved outside of court, see the Disputes Tribunal. For the full consumer rights section, see the New Zealand consumer law hub.
Frequently Asked Questions
Can a debt collector contact my employer or family about my debt?
Generally no. Consumer Protection guidance says a collector must not disclose details of your debt to other people, such as your employer or family, without your permission.
Can a debt collector call me repeatedly or at any time?
No. Collectors must not contact you unreasonably often or at times you have specifically asked them not to, and must not use physical force, pressure, or unreasonable harassment.
How do I dispute a debt I do not think I owe?
Put your dispute in writing to the creditor or collector as soon as possible, explain why, and keep records. Collection action should generally stop while a genuine dispute is being resolved, and you can ask for a disputed debt to be flagged or removed from a credit report.
Does an old debt ever expire in New Zealand?
Under the Limitation Act 2010, a creditor generally has 6 years to bring a new court claim to recover most debts. After that, the debt is often described as time-barred, meaning a new court claim to enforce it would generally struggle to succeed, though the debt is not automatically cancelled.
Does making a payment on an old debt restart the clock?
Yes. Making a part payment, or acknowledging the debt in writing, can start a fresh 6-year period under the Limitation Act 2010. If you think a debt may be time-barred, get advice before making a payment or acknowledging it.
What can I do if a debt collector breaks the rules?
You can complain to the Commerce Commission if the conduct may breach the Fair Trading Act, seek free advice from a financial mentor through MoneyTalks, or, for a genuine dispute about the underlying goods, services, or amount owed, take it to the Disputes Tribunal.
Sources and References
- Commerce Commission - Debt collection(comcom.govt.nz).gov
- Commerce Commission - Debt collector convicted and fined for misleading conduct(comcom.govt.nz).gov
- Consumer Protection - Debt collection and repossession(consumerprotection.govt.nz).gov
- Ministry of Social Development - MoneyTalks free financial helpline(msd.govt.nz).gov
- Limitation Act 2010(legislation.govt.nz).gov