Debt Collector Chasing You for a Car Accident That Wasn’t Your Fault? How to Dispute It in Writing

If an insurer or its debt collector is demanding money from you for a car accident you did not cause, do not pay, do not ring them, and do not ignore it. Put your dispute in writing, demand the evidence, and keep every letter. This week’s ABC report on an 81-year-old Queensland woman chased for $1,395 by Suncorp’s debt collector, over a crash she was not responsible for, shows exactly why the written route matters, and the ACCC’s Federal Court case against that same collector shows how often these notices overstate what you actually owe.

What happened to Diane Walker

According to the ABC’s report on 16 September 2026, Diane Walker was in a minor two-car crash just before Christmas. She says she was not at fault and caused no damage. AAMI, the other driver’s insurer and a Suncorp brand, contacted her seeking to recover costs. About two months later AAMI handed the matter to the debt collector ARMA Group, which decided she was liable, without providing evidence, and began sending letters. The first demanded $1,175.51. Three months later the figure rose to $1,395.51 with no explanation. ARMA also sent a separate claim to her son, who was not in the car.

One ARMA letter warned: “If you are found liable, you would be liable for court fees as well.” Ms Walker described them as “rather bullying-type letters” that sat “in the back of your mind all the time”. After months of correspondence her son went over the collector’s head to Suncorp executives. In June Suncorp dropped the claim for lack of evidence, apologised, admitted the collector had been engaged “prematurely”, and paid a $1,500 goodwill amount. Former ACCC chair Allan Fels called the conduct “Robodebt 2.0 of the worst form”.

The lesson is not that Suncorp eventually did the right thing. It is that the letters kept coming for months, and nothing changed until the dispute was escalated in writing to someone accountable.

The ACCC case against the same collector

ARMA Group is owned by ASX-listed Credit Clear, along with a related firm, Force Legal. On 25 June 2026 the ACCC announced Federal Court proceedings against both. The regulator alleges that between February 2022 and September 2025:

• ARMA sent at least 16,000 letters, emails and texts representing that a debt was owing when the consumer no longer owed the money or the debt was statute-barred.
• Force Legal sent at least 320,000 letters and emails containing misrepresentations, including that it had received legal instructions when it had not, that it was independent when it was a related entity, that payments could be deducted from wages without a court order, and that consumers had to pay all legal costs and interest automatically.

The ACCC is seeking penalties, declarations, injunctions and consumer compensation. Credit Clear, ARMA and Force Legal deny the allegations and intend to defend the case, so nothing has been decided. But the allegations describe a familiar pattern: template notices, sent at scale, that read as more certain and more legally serious than the facts support.

ACCC Deputy Chair Catriona Lowe said the allegedly misleading notices “had the potential to cause extreme emotional and financial stress”, and singled out “the alleged involvement of legal practitioners in developing the allegedly misleading communications” as “a particularly troubling aspect”.

What a recovery demand actually is

When another driver’s insurer contacts you after a crash, it is making a recovery claim: it has paid (or expects to pay) its own customer and wants the money from the person it believes caused the damage. Two things follow.

First, the insurer has to establish that you were at fault and that the amount claimed reflects the actual loss. A letter asserting liability is not proof of liability.

Second, a debt collector acting for the insurer has no more rights than the insurer does. It cannot take money from your wages, cannot add court fees to a claim that is not in court, and cannot make a disputed claim into an undisputed one by writing it in bold. The ACCC and ASIC publish a joint guideline on debt collection conduct, and Moneysmart’s plain-language guide to dealing with debt collectors sets out what collectors can and cannot do when they contact you.

Step one: stop talking, start writing

Phone calls are where these matters go wrong. You are put on the spot, you say something imprecise, and it is recorded. From the first letter, move everything to writing and keep copies.

Your first letter should do three things:

1. State plainly that you dispute liability and the amount. One sentence. Do not argue the whole case.
2. Demand the evidence. Ask for the claim form or incident report from their customer, the repair quote or invoice, photographs, any independent assessment, and the basis on which they say you were at fault.
3. Ask them to stop recovery action while the dispute is open, and to confirm in writing that they will.

Send it by email and keep the sent copy. If they have given you a reference number, quote it. Do not send originals of anything.

Step two: build your own file

While you wait, put together what you have: your photographs from the scene, the other driver’s details, any dashcam footage, witness names, a note of what happened written as soon as possible, and your own insurer’s correspondence if you reported it. If you were not at fault, your own insurer may be pursuing the other driver for your costs; tell your insurer that you are being chased and ask them to confirm their position in writing. Two insurers pointing at each other is common, and your file is what settles it.

Step three: if the letters keep coming

If the collector responds with another demand instead of evidence, or the amount changes without explanation as it did in Ms Walker’s case, escalate in writing:

• Complain to the insurer directly, not the collector. Every Australian general insurer has an internal dispute resolution process and must respond within set timeframes.
• Take it to AFCA. The Australian Financial Complaints Authority handles disputes with insurers, including third-party recovery claims, and it is free for consumers. You generally need to have complained to the insurer first.
• Report misleading conduct. If a notice claims legal action has started when it has not, threatens wage deductions without a court order, or adds costs that have not been ordered, that is the kind of conduct the ACCC is currently prosecuting. You can report it to the ACCC.

Do not pay “to make it go away”. A payment can be treated as an admission, and in Ms Walker’s case the amount claimed was withdrawn entirely once someone with authority looked at the evidence.

Step four: if they actually sue

A recovery claim of this size, if it ever reaches a court or tribunal, will be a small claim in your state’s minor civil jurisdiction. If you receive a genuine claim or application (not a letter threatening one), you must respond by the deadline on the document or risk a default judgment. Check the deadline on the tribunal or court’s own website, prepare a written defence that sets out why you were not at fault, and attach your evidence. Most claims that were never supported by evidence do not get this far.

How Claim Done helps

The hard part of a dispute like this is not knowing your position; it is writing the letter that states it properly, demands the right evidence and creates a record. Claim Done’s Legal Response takes the letter you received and your account of what happened, and generates a written response that disputes liability, demands the evidence and asks for recovery action to stop while the matter is in dispute. You review and approve it, then it is sent by email, and you keep the record. Every Claim Done document is a flat fee, with current pricing here. If you have already been sent a tribunal or court claim, the Tribunal Response prepares the defence and evidence pack for filing.

A debt collector’s letter is a claim, not a verdict. Start your written response on Claim Done and make them prove it.

Frequently asked questions

Do I have to pay an insurer's debt collector after a car accident?

Only if you were at fault and the amount reflects the actual loss, and even then the insurer has to establish both. A letter asserting that you are liable is not proof. Dispute it in writing, demand the evidence, and do not pay while the dispute is open.

Can a debt collector add court fees or take money from my wages?

Not for a claim that is not in court. Court costs are only payable if a court orders them, and wages can only be garnished under a court order after a judgment. The ACCC is currently alleging in the Federal Court that notices making these kinds of claims were misleading.

Should I call the debt collector to explain?

No. Put everything in writing and keep copies. Phone calls put you on the spot and are recorded; a clear written dispute and a demand for evidence creates a record you can rely on later with the insurer, AFCA or a tribunal.

What if the insurer's collector keeps sending letters anyway?

Complain to the insurer directly through its internal dispute process, then to AFCA, which is free for consumers. If the notices claim legal action has started when it has not, or threaten wage deductions without a court order, report the conduct to the ACCC.

What happens if they take me to court?

A genuine claim or tribunal application has a response deadline printed on it. You must file a written defence by that date with your evidence, or risk a default judgment.