Baycorp and Debt Collection

We explain what to do if Baycorp is contacting you and what your rights and obligations are

Updated 14 July 2020

If your financial situation has become challenging, you may be on the radar of debt collectors. Many New Zealanders are no stranger to the frustrating (and often annoying) presence of Baycorp and their persistent calls and letters.

This guide outlines what to do if are contacted by Baycorp, your rights and your options for settling a debt. The principles apply to all debt collectors operating throughout New Zealand. We cover:

1. ​Baycorp has contacted me - what is their process and what are my rights?
2. Baycorp and Debt Collection: Frequently Asked Questions
3. Dealing with debt collectors - our suggested approach

Know this first:

• Unless you signed a credit contract for a service or product, and then failed to make the contractual payments, Baycorp is unlikely to be something you need to be concerned about.
  
• There is one exception: Fines from government bodies (i.e. city councils). We address this subject below.
  
• Throughout New Zealand, companies and individuals frequently threaten people with "we'll take you to Baycorp" or similar. In many cases, this can't happen as there is no signed contract meaning nothing can be enforced.
  
• Unless the debt appears on your credit report, there's little chance of the debt being passed on to Baycorp.

But, be aware: Many local and central government departments use Baycorp. Common examples include local libraries, local authority parking (such as Auckland Transport) and ministries who issue fines. You won't be able to make payments to the public organisation once the debt has been passed on to Baycorp.

Who is Baycorp?

The most established debt collection agency in New Zealand, Baycorp serves a prominent role as a debt collector for many businesses nationwide. From broadband companies to Auckland Transport, Baycorp exists to help companies improve their cash flow by purchasing or managing their debts at a discount and chasing the money owed. This means they only get paid if they collect the debt, so it's their business to push as hard as they (legally) can.

Baycorp's process - an example:

1. If you owed $5,000 on a store card, the retailer may pass the debt to Baycorp.
2. Baycorp is given the right to collect the debt, and also gets all of your contact details.
3. Baycorp then chases you to pay the money owed and takes a fee from doing so.
4. Baycorp's work takes time and effort and costs money. This is why many credit contracts (i.e. personal loans, credit cards) state that debt collection fees will be added on top of any unpaid loan balance.
5. If the debt remains unpaid, Baycorp generally gets nothing and, after a certain time, the debt is written off unless court action is initiated. 

Important: MoneyHub, in publishing this guide, is in no way suggesting that ignoring Baycorp communication is in any way a good idea. We have put this information together to help people know where they stand with Baycorp and debt collection agencies in general.

Why is Baycorp contacting me?

Baycorp's business is focused on collecting debts. They are usually hired by a business to pursue debt collection on their behalf.

If Baycorp is contacting you, they’ve most likely been hired by a company for which you have an outstanding account. This could be anything from car finance, a phone bill or credit card. If you’ve missed payments, have unpaid bills, ignored phone calls and other attempts from the company itself, or a lengthy amount of time has passed, then you’re more likely to have Baycorp (or other debt recovery agencies) contact you.

A MoneyHub user shares his experience:
"I got a bit carried away with some bills and racked up about $5,000 of debt. I then went to Australia for a month, came back and saw a few letters from a couple of companies. I ignored them, paid a little off, and then phoned one when I had some money to pay off more. I was told the debt had moved from 'collections' to Baycorp. Things became expensive with fees, and it took a while to pay the debt off. Baycorp, in my experience, didn't seem very customer-friendly, and I'd like to not repeat the process".  ​
- Brian, Auckland

Baycorp has contacted me - what is their process and what are my rights?

1. If Baycorp has contacted you, your first option is to pay the outstanding debt if you can. However, life isn’t that easy and, most likely, you won’t have the means to pay the entire balance at once. 
2. Other options that Baycorp can pursue (if you are unable to pay the debt immediately) include arranging a payment plan, repossession (if the debt is secured, i.e. take your car or TV), or take legal action. Baycorp is more likely to take legal action against debts if you ignore their phone calls and refrain from reasonably making attempts to pay off your debt.
3. If you settle the debt, Baycorp will mark your file as repaid. If you don't settle the debt, there are two more things that can help.
   

• Firstly, if the debt is secured, your personal property that was pledged as security can be repossessed to help clear the debt. If the proceeds don't settle it, Baycorp will notify the credit bureau that you have defaulted on a debt. 
• Alternatively, if the debt is unsecured, Baycorp will notify the credit bureau that you have defaulted on a debt. Your personal possessions can't be touched as the debt has no security.

Be aware, debt collectors can contact your family and employers: Baycorp can reach out to your employer, family, and even show up at your home if they are unable to get into contact with you. This is why starting a dialogue (i.e. responding to their messages) as soon as possible. 

If payment is not arranged, Baycorp can also report the debt to the credit bureau. Certain debts reported to the bureau and defaults will remain on your credit report and affect your credit score for anywhere between two to five years, even after payment has been made in full. You can read more about this in our Credit Scores Guide.

An example of Baycorp collection timeframe: Auckland Transport's debt collection process for unpaid infringements 

1. 28 days after infringement ticket issued: Auckland Transport sends vehicle owner reminder notice.
2. 63 days after ticket issued: Unpaid fine referred to Baycorp for collection either immediately or through payment by instalments.
3. 87 days after unpaid fine is referred to Baycorp: Case sent back to Auckland Transport to consider whether to waive the fine or hand it to Ministry of Justice for collection through the court system.

What are my rights with debt collectors?

Many debt collection agents are professionals and know exactly what tone to take and what to say to scare debtors into paying their outstanding bills. You do, however, have rights and there are many things Baycorp and other agencies cannot do:

1. Under no circumstances can a debt collector harass or threaten you. Even the threat of legal action must have just cause and probability. 
2. Debt collectors should only contact you if they have a reasonable reason to do so. The term “reasonable” remains open; however, it includes reasons such as asking for payment or creating a payment plan. It does not include persistent phone calls intended to annoy or threaten a debtor into paying.

Baycorp and Debt Collection Frequently Asked Questions

Debt collection is not a topic where there is a lot of customer-facing information. To help you understand where you stand, we have published regularly asked concerns about dealing with debt collectors.

Can a debt collector come to your house?

Yes, but only if your debt is secured. Usually, however, they only use this approach as a last resort before legal action if they’re unable to speak to you via phone or other methods (they don’t usually want to leave the secrecy they can keep from behind their desk). What debt collectors can’t do is use force to enter your house or garage, take advantage of vulnerability or disability, or use physical force or pressure to gain control, harass, or threaten you into paying.

Most importantly, they 

Defaulting on a secured debt is a little different
If you have a secured debt (i.e. a car, television, etc.), the items pledged as security can be repossessed by the debtor in order to sell to pay off any balance owing. They cannot, however, enter your home without a repossession warning notice and have a reasonable belief that the secured item is within your home. You can read more about repossession here.

Generally, repossession agents are very careful to ensure they are entering a property occupied by the debtor, and repossess specifically only the items listed in the agreement. Anything taken beyond what's on the list is theft.

What happens if you never answer or respond to debt collectors?

Sometimes you can ignore debt collectors and, in some cases, they may eventually stop contacting you. If the debt is small, owing to a business outside of the country, and/or not worth taking legal action, then there’s nothing much more the debt collector can do.

The debt will, however, more often than not be reported to the credit bureau where it will remain on your report as an unpaid/derogatory debt. It says on your credit report for at least three tears. Once it falls off your credit report, the debt is still owed but will be written off by the company. But companies don't forget you owed them money. You're therefore unlikely to be able to enter into credit contracts with them in the future. ​
​

Can collectors take you to court for a debt?

Yes - but in most cases, this is relatively rare. The costs for a company or debt collection agency are likely to be too high. For this reason, the limit of their powers is regular chasing for payment.

If a business you owe money chases you through the courts, the Department of Justice outlines the process. If you lose the case, a court order will be made to pay the amount determined by the judge.
​

Can debt collectors issue a warrant for my arrest?

No - debts are a civil matter, not criminal, so you can't be arrested or go to jail for not repaying a debt. If the debt is court-ordered and you fail to repay, your property can be seized and/or you can be sentenced to community work for not following a court order. The Department of Justice  website has more details. 

Can debt collectors take money from your bank account without permission?

No - unless you have a direct debit set up, which is unlikely if a third party is collecting the debt. Any debt collector will use phone, mail, email and in-person contact to encourage you to make payment on your account. ​

Can I be bankrupted by a debt collector?

Yes - but this rarely happens unless you have a lot of debts and can't meet any repayment demands. This excellent Consumer guide explains bankruptcy (and the alternatives) in detail.

I don't owe the debt I'm being chased for - what can I do?

​

If you don’t agree with the amount, or even the business in which you apparently owe a debt, you can write a letter to the debtor outlining that you dispute the debt.

If you don’t believe you owe any debt to the collector in question, do a credit check to find out if there are any issues with identity theft on your report. If you don't recognise it, reach out to the company and raise a dispute.

If you do dispute the debt, Baycorp (and all debt collection agencies) must stop contact until the issue has been resolved. If they continue to pester you for payment, you have the right to reach out to the debtor to let them know about the situation. 

What are the repercussions of having a default on my credit history?

If you've defaulted before, it's likely the company that referred you to Baycorp will put you on an internal blacklist list. While no companies will publicly confirm they operate blacklists, it's widely understood they do as a way to protect themselves from further bad debt. 

If you have a history of missing payments, or have defaulted, you are more likely to be rejected when applying for new credit. It’s not personal, it’s simply lenders minimising their risk of unpaid debts.

Approaching debt collectors - our suggested approach

It's unlikely you'll have the money to settle a debt right away. To protect yourself from committing to something that's not in your interest, we suggest following this process:

1. Find out what the debt relates to first. When anyone is contacted by Baycorp, the statement or caller must state what company the debt relates to. If you don't recognise the company mentioned, you can check your credit report by using Credit Simple to see who the debt is related to.
2. Keep it in writing. If you do contact Baycorp, it's a good idea to keep communication in writing so there is a clear record.
3. In some instances, the debt is fraudulent. If it turns out that your identity has been stolen and the debt does not relate to your activity, information on how to get your credit record corrected can be found here.
4. Look after your interests. In all interactions with Baycorp. we suggest being honest and responsive, but also protect your position and don't agree to anything without checking it over first.
5. Work out repayments. Repayments are often a better solution than outright default and/or repossession. 
6. Understand how repossession works. If you’re interested in learning more about your rights when it comes to Baycorp and other debt recovery agencies, especially repossession, we suggest visiting this government-published guide.

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• Debt help
• Credit Scores and Credit Reports
• KiwiSaver hardship