You thought some of those old debts had gone away for good. Better think again as you could be haunted by zombie debts .
What are zombie debts?
There are several types of zombie debts. The most common type is where a debt collector has resurrected it. Debt collectors are normally paid on a commission basis. This gives them a lot of motivation to collect from you – even on one of your very old bills. A second type is where you made a payment on an old debt, which brought it back from the grave.
How zombie debt can happen
How does zombie debt happen? Your creditors regularly remove old debts from their books and sell them to third-party debt collectors and usually for just a few cents on the dollar. This means that the debt collectors can make money even if they only collect part of your original debt. This is the incentive the debt collector has to resurrect your bill even if you incurred it many years ago. These collectors are “scavenging” for debt and are often called debt scavengers.
The most common types
The most common types of zombie debts are those you owed but had forgotten about or ones where you thought you had paid the creditor. Others include charges made fraudulently because you were the victim of identity theft, debts that were discharged in a bankruptcy and those that had gone beyond their statute of limitations.
Be careful, be very careful
Because zombie debt is old debt it a can be a real danger. This can be especially true if the debt collector is using high-pressure tactics so it’s hard for you to know whether the debt is really legitimate. Your debts could have been sold over and over, the information may have changed and the debt collector could be trying to collect on an erroneous debt. If you make a payment on an old debt this will restart the statute of limitations, which would make you susceptible to being sued.
Get all the facts
If a debt collector calls you about a very old debt the first thing you need to do before making a decision is get all the information you can. Even if you feel seriously pressured don’t commit to making a payment even for as little as $10. Ask the debt collector instead for a validation letter. This letter will have all the details of your debt including the name of the original lender, the amount you owe and how you could challenge it. This information should help you confirm that the debt is yours and that you haven’t already paid it.
Know your state’s statute of limitations
The next important thing to do is to determine whether your debt has passed your state’s statute of limitations. The debt collector won’t probably give you any information about this so you will need to research your state’s laws about what’s called time-barred debt. The bottom line is that you can’t be sued legally if the debt has passed your state’s statute of limitations. But be aware that debt scavengers do buy debts where the statute of limitations has passed as they hope they can persuade (or trick) you into paying voluntarily.
Don’t resurrect the debt
Don’t under any circumstances say that you owe the debt – either verbally or in writing – and don’t pay anything until you’ve determined that the debt is really yours and whether the statute of limitations has passed. If you make even a small payment this will resurrect the debt and restart the clock on its statute of limitations.
If you are sued
A debt collector could sue you. If they do and you receive what’s called a summons and complaint, don’t ignore it. Go to an independent source to determine how to contract the court where the suit was filed. Contact the court to see if it’s real because If it’s a phony lawsuit it’s number will also be phony. If the lawsuit is real, you’ll need to act quickly because there will be a limited amount of time for you to respond. And if you fail to respond to the summons you could forfeit your right to dispute the lawsuit and the collector might get what’s called a summary judgment. If this happens, the debt collector could actually garnish your wages.
Understand that you have rights
You do have rights as spelled out in the Fair Debt Collection Practices Act. For example, if you’re being hassled by a debt collector over a zombie debt you could write a letter asking it to stop contacting you. If you do this the collector must either stop contacting you or send you a letter that it will be suing you.
Check your credit reports on a regular basis
It’s important to check your three credit reports (from Experian, TransUnion and Equifax) to see if a zombie or scavenger collector has illegally reported one of your old debts. If so, you have the right to dispute this per the Fair Debt Collection Practices Act and have it removed.