What happens while a debt is in dispute
Once you've raised a dispute, knowing what to expect helps you stay calm and keep things on track.
This guide helps you
- Understand the typical stages of a debt dispute
- Know what should happen to collection while you dispute
- Learn what responses to expect and how to read them
- Keep records throughout the process
- Know when to escalate and where to get free help
7 min
What's happening
Once you've raised a dispute, the creditor or collector should look into it and respond. While the dispute is open, it's reasonable to expect collection activity to be paused or paced sensibly rather than escalated. Knowing the usual rhythm — raise, investigate, respond, resolve or escalate — helps you stay in control. This is general information, not legal advice.
Your first steps
- Confirm your dispute was received and get a reference if possible.
- Ask them to pause collection while they investigate.
- Diarise a follow-up date so it doesn't drift.
- Keep all correspondence in your dispute folder.
Step by step
- You raise the dispute in writing and ask for collection to be held.
- They acknowledge it and begin to investigate.
- They respond — agreeing, partly agreeing, or rejecting your dispute with reasons.
- You review the outcome and decide whether you accept it.
- If you don't, you escalate — an internal complaint first, then free external dispute resolution.
What evidence helps
Keep the acknowledgement of your dispute, any reference number, the dates of each contact, and the final response with its reasons. If the creditor sets a timeframe to respond, note it. A clear record makes escalation straightforward. You can look up terms like "internal dispute resolution" at directory.merion.com.au/glossary.
Where to get free help
If the process stalls or the response is unclear, a financial counsellor can help — call the National Debt Helpline on 1800 007 007 (free). If you're not satisfied with the outcome, you can usually take it to a free external dispute resolution scheme such as AFCA. See directory.merion.com.au/bodies for who handles what.
Key takeaways
- Expect a cycle of raise, investigate, respond, resolve or escalate
- Ask for collection to be paused while the dispute is open
- Keep the acknowledgement and final response with their reasons
- Free help is available if the process stalls or the answer is unclear
Frequently asked questions
Will collection stop while I dispute?
It's reasonable to ask the creditor to pause collection while they investigate a genuine dispute. Get this confirmed in writing where you can.
How long does a dispute take?
It varies by creditor and complexity. Ask for their expected timeframe and diarise a follow-up so it doesn't drift.
What if I don't accept their answer?
You can lodge an internal complaint and then escalate to a free external dispute resolution scheme such as AFCA.
This is general information, not legal or financial advice. Your situation is unique and rules can vary by state and over time — for advice on your circumstances, speak to a free financial counsellor (National Debt Helpline 1800 007 007) or get legal help.
Know your options, know your rights
A free, plain-English guide to dealing with debt in Australia — and the people who can help.