It’s a situation no one would choose to end up in—owing money, in financial strife, and with a menacing debt collector on the doorstep.

“Most of us would agree that if you owe money, you should pay it back,” says Victoria Stace, senior lecturer at Te Kauhanganui Tātai Ture—the Faculty of Law.

But people’s circumstances can change dramatically—they lose their job or their home—and expenses that were manageable one week suddenly spiral out of control. Then the debt collector arrives and things go from bad to worse.

Last year, Victoria and fellow researchers worked with budget advice and financial mentoring services to investigate debt collection practices. They gathered information from 43 budget advisers and mentors about their experiences on the frontline helping people deal with unmanageable debt.

“We found serious issues with how debt is collected and the data suggest harassment is common,” she says.

Repeated phone calls and texts were the most frequent form of harassment reported, but there were also cases of threatening behaviour. Several budget advisers described companies sending “intimidating” collection agents to people’s homes, including agents who were dressed in uniforms that made them look like police officers.

“They’re in dark uniforms and one company even had [a] police-type vest … this puts the fear of the Lord into [people] when they turn up at their home and all the neighbours are looking,” said one budget adviser.

On top of the high-pressure tactics, the researchers found it was common for debt collection companies to add fees to the amount the person had to repay. These fees could even include charges for making a repayment on the amount owing and for the debt collection company sending the person a letter.

Some charged interest as well. Several companies “appeared to be deliberately letting time go by” and interest accumulate before attempting to collect the debt, Victoria says.

In one case, an adviser said her client was being charged 26 percent interest, with the end result that the woman’s $6,000 debt had ballooned to nearly $10,000.

Victoria believes fixing these problems will require detailed guidelines on what debt collectors can and can’t do, as well as changes to the Fair Trading Act to improve consumer protection.

She says debt collection guidelines could be modelled on those in place in Australia, which set out things such as times of the day when companies can contact people, as well as the number of times they can make contact.

“Many people who find themselves overburdened with debt are already in vulnerable positions and may have little understanding of their rights. One thing is clear: they deserve to be treated with compassion.”