Zombie Debt: What You Need to Know
The name sounds ominous, and the impact can be damaging if you’re not careful. Zombie debt is old debt that’s been revived by a debt collector. Here’s what you need to know about zombie credit card debt and other forms of it and how you can respond.
What is zombie debt?
Zombie debt is any type of unpaid debt that you thought was long gone. Either it’s already fallen off your credit report, you’ve already paid it off, or it’s past the statute of limitations. It may not even be yours, to begin with.
Debt collection agencies resurrect zombie debt often to try to collect it. They may even try to sue you for payment. These zombie debt collectors may try to bring back any of the following:
- Debts you’ve long forgotten about.
- Fraudulent charges you never knew about.
- Debts already satisfied in bankruptcy or a settlement.
- Debts that are time-barred, which means the agency can’t sue.
From the debt collector’s perspective, it makes sense to revive old debts because they usually purchase those debt accounts for pennies on the dollar. So if they can recover even a little bit, it’s a profit for them.
How to handle zombie debt when collectors come calling
If you’ve received a call or some other form of communication from a debt collector, the most important thing you can do is not to ignore it. You can request that the collector stop contacting you, but that doesn’t erase the debt or keep them from filing a lawsuit.
Here are some steps you can take.
1. Request a zombie debt validation letter
Debt collectors are required to send you a validation letter within five days of your first contact. This letter provides the information that should link the debt to you. It also includes information on how to challenge the debt. If you haven’t received it, request it.
With this information, you can determine whether the debt actually belongs to you. As such, it’s crucial that you don’t acknowledge that you owe money until after you’ve received the validation letter.
2. Gather your records
As previously mentioned, zombie debt can sometimes be an account that doesn’t belong to you, is fraudulent, or has already been satisfied.
Take some time to search through your records, including letters, emails, bank statements, and more, to show that you’ve already paid the debt or it doesn’t belong to you. No matter what pressure you feel from the collection agency, it’s crucial that you establish the facts about the situation.
3. Plan your response
With all of the information in hand, you can now plan your response. For example, if you find that the debt is past the statute of limitations, you know that the collection agency can’t sue you. If you request that they stop contacting you, they’re required by law to comply.
If you find that you already paid off the debt with the original lender or another debt collector, you can provide that documentation to show you don’t owe anything.
Finally, if you determine that the debt does belong to you and it’s not time-barred, you may want to try to settle with the collection agency for less than what you owe. While it’s possible to negotiate on your own, it’s a good idea to considering hiring a professional.
For example, the Tayne Law Group has decades of experience negotiating with creditors on behalf of consumers. What’s more, you can get a free consultation to see if this path is right for you and what you can expect.
A professional can also help you understand your rights in the debt collection process.
Note that the debt collector may harass you or even threaten to sue during this time. An attorney can deal with the collector on your behalf, so you can rest freely.
How to prevent zombie debt from surprising you
When zombie debt collectors come after you, it may feel like you’ve been blindsided. It’s impossible to keep them from pursuing you for a debt you don’t owe or one that you’ve already paid off. But there are steps you can take to avoid the surprise in most cases:
- Check your credit report: Negative items remain on your credit report for seven years. So if you have a debt you’ve forgotten about within that timeframe, you’ll be able to find it on your credit report. The same goes if you’ve fallen victim to fraud. You can get a copy of your report from each of the three credit bureaus through AnnualCreditReport.com.
- Keep track of your accounts: Managing money can be stressful at times, but try to keep a log of your financial accounts, including credit cards and loans, so you don’t accidentally forget about any of them.
- Make your payments on time: It may be too late with your zombie debt, but try to make one-time payments a priority going forward. Setting up automatic payments can help you avoid missing one.
And remember, if a debt collector calls you, don’t share any information because they can use it against you. Instead, ask for a zombie debt validation letter and take the steps above to determine the best approach for you.