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Presumably it is just a threat. The amount owed is still in dispute and so I don't imagine there would be legal grounding for them to collect. If a debt collection agency were to approach you, you could ask under what legal authority do they have to collect - I don't think the Australian...
Has anybody in Australia (Melbourne) sought local advice? Anybody found someone knowledgeable enough in this field whose details they may be able to share? If so please PM me.