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Can debt collectors take money out of your bank account?

Mark Bristow avatar
Mark Bristow
- 2 min read
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If you find yourself struggling with an outstanding debt, at some stage you could be contacted by a debt collector. In this situation, remember that both debtors and debt collectors have rights and obligations. For example, a debt collector cannot take money directly from your bank account or salary without a court order.

A debt collector may contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements. This contact may be made at reasonable hours over the phone, face to face, at work, or via email and social media, though they can only visit your home or another agreed location as a last resort when other methods of contact have failed.

Debt collectors are obliged to consider your financial circumstances and are often prepared to negotiate a payment plan that could help you get on top of your outstanding debt. Taking legal action is often a last resort to seek payment in full.

Creditors (the debt collector’s client) cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt from your bank account or salary. This drastic action is usually taken only if you’ve ignored several notices asking you to pay the debt.

Once a garnishee order is issued, your bank will put a freeze on your account as it processes the order. This usually takes two to three days, and you won’t be able to access any of your money during this time.

Typically, there is nothing you can do to stop a garnishee order other than immediately paying back your what you owe in full or making other arrangements to pay it off in instalments. If you receive Centrelink payments, these may be protected, depending on what the court order says. You could also consider entering into a Part IX Debt Agreement, a Personal Insolvency agreement, or even declare bankruptcy if it becomes necessary.

If you’re having trouble with outstanding debt, you may want to consider seeking assistance before your creditors call in debt collectors. Free financial counselling services are available via the National Debt Helpline on 1800 007 007.  

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Product database updated 14 Nov, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.