Debt Consolidation

How Zombie Debt May Come Back to Haunt You

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While zombie debt won’t require you to board up your windows and steer clear of graveyards, it can be tricky to deal with if you don’t understand your rights. An old debt can hurt your credit, and even lead to lawsuits, if you’re not careful about how you deal with debt collectors.

Click below to learn how to bury zombie debt for good.

What is zombie debt?

Zombie debt is debt that is very old, no longer owed or never belonged to you. Both legitimate debt collectors and scammers may contact you to collect on zombie debt. Because zombie debt collectors acquire old debts at an extremely low cost, they are sometimes known as debt scavengers.

Sources of zombie debt include:

  • Time-barred debt: These debts are so old that state law prohibits debt collectors from suing you for what you owe. After a certain time period, known as a statute of limitations, debt collectors can no longer pursue legal action against you. However, you still owe the debt and the debt collector may contact you requesting payment.
  • Discharged debt: If your debt was discharged during your bankruptcy filing, you no longer owe the money. But debt collectors may still try to get you to pay it.
  • Wiped-out debt: After seven years, a debt in collections falls off your credit report and no longer affects your credit score. But you still owe the debt, which means a debt collector may contact you to pay it.
  • Someone else’s debt: Sometimes a debt collector will try to collect a debt you don’t even owe. That’s either because of a simple mistake on the part of the creditor or because you were the victim of identity theft.

What happens if you make a payment on zombie debt?

If you make a payment on a time-barred debt, the debt could become current again, which means that debt collectors would be able to sue you if you don’t pay off the rest. And if you make a payment on debt that isn’t yours, it will be much harder to prove that it isn’t.

What to do if debt collectors come calling

Ensure the debt collector is legit

Ask for the debt collection company’s name, phone number, and physical address, which a legitimate debt collector should provide. If debt collectors are licensed in your state, you can also ask for the license number.

You also don’t have to do anything until you receive a debt validation letter, which will give you more information about the debt and help you determine if it is yours. Debt collectors are required to send these, so you can tell the caller that you’d rather not discuss payment until you receive yours.

Until you verify that the debt collector is legitimate, don’t share any personal or financial information with the caller, since they might be a scam artist.

Verify whether the debt is zombie debt

The next step is to ensure the debt you owe is, in fact, zombie debt. If you think it might be, wait until you receive your debt validation letter, and check when the first missed payment happened. You can then calculate how old the debt is and cross-reference that information with your state’s statute of limitations.

Finding the statute of limitations in your state: Rules about time-barred debts vary by state, and most states have different statutes of limitations for different types of debt. For example, in Illinois, debts based on written contracts won’t become zombie debt for 10 years, while those classified as unwritten contracts, including credit card debt, will become zombie debt after 5 years.

To find out the basics about statutes of limitations in your state, check out the interactive map below:

Decide what to do with the debt

Once you’ve determined that a debt is zombie debt, you have several options for how to proceed. Here’s what to expect from the following actions:

  • Do nothing: If you choose not to pay a time-barred, a debt collector can’t pursue legal action against you. You may still receive phone calls from the debt collector, but your situation won’t get any worse. However, if the debt is not old enough to be wiped from your credit report, it can negatively impact your credit score until it is removed, which will result in higher interest rates and more expensive insurance premiums.
  • Start making payments: If you choose to make a payment on a zombie debt, your debt is revived and considered current again, depending on your state’s procedures. That means a debt collector would be allowed to sue you for the full amount. So unless you can arrange a payment plan with the debt collector and get it in writing, we wouldn’t advise this option.
  • Settle the debt: If you have enough money, paying the entire debt will be your best option, since you’ll be free from any negative consequences. However, prior to making any payment, you should ask the debt collector to send a signed form indicating that the debt will be settled and will no longer be your responsibility.
  • Dispute the debt: If you believe the debt was assigned to you in error, you must dispute the debt in writing within 30 days of receiving the first letter from the debt collector. The debt collector must then halt all collection activities until the debt is verified. If the debt collector never sent you a written notice, you can dispute the debt even if more than 30 days have passed. The Consumer Financial Protection Bureau (CFPB) has sample letters you can use to dispute the debt. Always keep a copy for your records.
  • Tell the debt collector to stop calling: Under the Fair Debt Collection Practices Act, a debt collector must stop calling you if you send a cease and desist letter. If your debt is current, this can make a lawsuit more likely. But if your debt is zombie debt, the debt collector will not be able to pursue legal action against you, so it doesn’t hurt to send a cease and desist letter.

If zombie debt collectors refuse to stop calling

If a debt collector is contacting you illegally to collect on debt that is already settled or hasn’t been verified yet, or if a debt collector continues to call you after you send a cease and desist letter, you should file a complaint with the CFPB.

If a debt collector refuses to provide the required information, requests personal information from you, or you otherwise suspect a scam, you should file a complaint with the Federal Trade Commission.


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