What Is Zombie Debt?


If you’ve ever been sent to collections over an unpaid debt, then you know what a hassle this process can be. Collection agencies are often aggressive and resort to harassing phone calls and manipulative debt collection tactics.

In most circumstances, you can work something out with your creditors, deal with the delinquency, and move on. But what if you’ve dealt with your delinquency and your creditors are not moving on?

Then you’re dealing with a problem commonly referred to as zombie debt.

What is zombie debt?

Zombie debt is any debt that has long been erased from your credit report, yet debt collectors still keep attempting to collect on it. The debt could be past the statute of limitations, already paid off, or it may not even be yours.

The original creditor is likely done with it and has moved on. But just when you think it isn’t an issue anymore, the debt is bought by another debt collection agency. Then, you start receiving harassing phone calls and letters all over again.

Zombie debt can be very frustrating. This is because it continues to cost you money for a mistake that you’ve already dealt with or were never responsible for in the first place. Even if a debt collection agency cannot legally collect on the debt, they can report it to the credit bureaus. And having a collection on your credit report hurts your credit score.

Common Cases of Zombie Debt

Let’s look at some common cases of zombie debt:

  • Time-barred debt that is past the statute of limitations: If you default on a loan, the debt collector has a certain length of time that they can collect on that debt and take you to court. Once you’re past the statute of limitations, you’re no longer liable for the debt. However, zombie debt collectors will often purchase the old debt and attempt to collect it anyway.
  • Discharged or settled debts: Sometimes, debt collection agencies will attempt to revive debt that has been dealt with and discharged through bankruptcy.
  • Debt that isn’t yours: If you’ve been the victim of identity theft, then a debt collector may be harassing you about debt that isn’t even yours. This is the most frustrating kind of zombie debt, since you never did anything wrong.

Tactics that Zombie Debt Collectors May Use

Zombie debt collectors, also called debt scavengers, only have one goal. It’s to convince you to make a payment on the debt they claim you owe. And many third-party debt collectors are willing to resort to questionable or even illegal practices to get you to pay up.

That’s because as soon as you pay on the debt, it gives debt scavengers an opening to sue you for the remaining balance. If the original debt is beyond the statute of limitations, even a small payment resets the clock entirely.

Knowing some of the common tactics that a debt collection agency uses is the best way to know how to handle them. Here are a few examples to watch out for:

  • Threaten to sue you: Many debt collectors will threaten to take you to court, even if they can’t legally collect on the debt and are not allowed to sue you. The goal is simply to scare you into making a payment.
  • Verbally harass you: According to the Fair Debt Collection Practices Act (FDCPA), debt collectors are not allowed to harass borrowers. But unfortunately, many debt collectors do it anyway.
  • Try to get information out of you: Debt collectors will try to learn anything about you that they can so they can use the information against you.
  • Lie to you: Many debt collectors will promise to stop bothering you if you make a payment. They may also promise to remove negative items from your credit report in exchange for a payment. This is usually just a manipulation tactic to get you to make a payment.

If you are dealing with a debt scavenger that is breaking the law, you can file a complaint with the Consumer Financial Protection Bureau (CFPB). Alternatively, you can contact the Federal Trade Commission (FTC) or your state’s attorney general.

See also: How to Deal with Debt Collectors

How to Get Rid of Zombie Debt for Good

If you’re constantly being contacted about zombie debts, it may feel like there is no end in sight. Let’s look at a few ways you can finally kill that zombie debt for good.

1. Monitor your credit report

Information is your best defense against zombie debt collectors who will lie to you to get you to make a payment. Make sure you monitor your credit report closely and watch out for any new items affecting your credit score.

Every consumer is entitled to receive one free credit report every 12 months from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. To obtain your free credit report, you can visit AnnualCreditReport.com, which is the only authorized website for free credit reports.

Review your credit report thoroughly and look for any inaccuracies or errors that could be negatively affecting your credit score. If you do notice any mistakes, you can file a dispute with the credit reporting agency to have the information corrected. Additionally, by monitoring your credit report regularly, you can be alert to any new items that could be indicative of zombie debt collection attempts.

2. Don’t let a zombie debt collector pressure you into making a payment

People often feel embarrassed by their old debt, which gives a debt collector an opening to manipulate you into paying. But you shouldn’t make any payments until you have further information.

The minute you make even a small payment, it becomes much harder for you to get rid of that zombie debt. If you’re past the statute of limitations, making a payment resets the clock on that debt.

If the debt isn’t yours, it becomes much harder to prove that fact if you’ve made a payment. So, no matter how much a debt collector tries to pressure you or embarrass you, refuse to make even a small payment on the debt.

3. Ask the creditor to verify the debt

Send the debt collector a debt validation letter. This is a letter requesting that a debt collector prove you owe the debt and that they have a right to collect on that debt.

If they are unable to validate the debt, then they cannot legally attempt to collect on it. And if they’re unable to validate the debt, they must remove the item from your credit report.

4. Seek additional help

And finally, if this problem doesn’t seem to be getting any better, then it may be time to seek the help of an attorney. Stop communicating with the debt collector. You don’t have to respond to them. An attorney will inform you about what your rights are and what the best course of action is.

Bottom Line

Zombie debt can be challenging to deal with, and it may feel like an issue that will never go away. However, you can prepare yourself for zombie debt collectors by knowing some common tactics they use and enlisting the help of an attorney. And once the debt is resolved for good, you can move forward with repairing your credit and building a better financial future.

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about various personal finance topics including student loans, credit cards, investing, building credit, and more.