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
Zombie debt comes in several forms, often making it difficult for people to understand what they’re dealing with. Here are the most common scenarios:
1. Time-Barred Debt (Past the Statute of Limitations)
Time-barred debt refers to any debt that has exceeded the statute of limitations, meaning creditors are legally barred from suing you to collect. The statute of limitations varies depending on the type of debt and your location.
For instance, in some states, it’s as short as three years, while in others, it may extend up to ten years or more. Although the old debt is technically no longer enforceable in court, zombie debt collectors may still attempt to collect by using aggressive tactics, including threats of legal action, which are often empty.
2. Discharged or Settled Debts
Sometimes, collectors will attempt to revive debts that have been discharged in bankruptcy or fully settled. These debts should no longer be collectible, yet zombie debt collectors buy them at a discount and harass consumers into making payments.
If a debt has been discharged, you are not liable for it, and any attempt to collect could violate consumer protection laws. Unfortunately, many consumers are unaware of their rights and can be tricked into making payments.
3. Debts That Aren’t Yours (Identity Theft)
If you’ve been the victim of identity theft, you may find yourself pursued for debts you didn’t incur. Identity thieves can open accounts in your name and rack up debt, leaving you to deal with the fallout.
This type of zombie debt is especially frustrating, as you are not responsible for it. Handling these cases involves disputing the debt with both the collection agency and the credit bureaus, while simultaneously addressing the identity theft itself.
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 collection agencies 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 of them 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
Dealing with zombie debt can be exhausting, but there are concrete steps you can take to eliminate it once and for all. Follow these steps to protect yourself and put an end to zombie debt collection efforts.
1. Monitor Your Credit Report Regularly
Your credit report is your first line of defense against zombie debt. Use a free credit monitoring service, such as Credit Karma or a tool offered by your bank, to keep track of any changes to your credit. Set up alerts to notify you of new inquiries or collections that may appear unexpectedly.
Monitoring your credit frequently can help you spot zombie debt early, allowing you to take swift action before it causes serious damage to your credit score. You can obtain your free credit report annually from all three major credit bureaus—Equifax, Experian, and TransUnion—by visiting AnnualCreditReport.com.
2. Send a Debt Validation Letter
If a zombie debt collector contacts you about an old debt, act fast by sending a debt validation letter. This letter should be sent within 30 days of the initial contact. In it, request proof that the debt is yours and that the collector has the right to collect it. Include key details, such as your account number and any relevant dates.
The collector must provide evidence of the debt, including the original amount and creditor. If they cannot validate the debt, they are legally obligated to stop collection efforts and must remove the debt from your credit report. Keep copies of all correspondence for your records.
3. Dispute Inaccurate Items on Your Credit Report
If zombie debt has made its way onto your credit report, you’ll need to dispute the entry with the credit reporting agencies. File a dispute with each of the three credit bureaus where the debt appears (Equifax, Experian, and TransUnion).
You can file disputes online, by mail, or by phone. Provide documentation, such as your debt validation letter, to support your claim that the debt is invalid. The credit bureau is required to investigate your dispute, and if they find the debt cannot be verified, it will be removed from your credit report.
4. Avoid Making Payments on Zombie Debt
Even if you’re being pressured by a collector, avoid making any payments on zombie debt. Paying even a small amount could reset the statute of limitations, allowing the debt collector to take legal action against you.
Be firm in your refusal to pay until the debt has been properly validated. If the debt is past the statute of limitations or isn’t yours, paying could make it much more difficult to dispute the debt in the future.
5. Consult an Attorney if Necessary
If a debt collector continues to harass you despite your efforts, consider seeking legal assistance. An attorney who specializes in debt collection law can help you understand your rights and may be able to stop the harassment.
Many attorneys offer free consultations, so you can get a sense of whether legal action is necessary. Additionally, if the debt collector is violating the FDCPA, you may be able to file a lawsuit against them.
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.