Debt Collectors And Zombie Debts

If a debt collector is harassing you over a debt that you thought was dead and buried, you may be dealing with a “zombie debt.”

What usually happens is that you’ll get an unexpected phone call or letter asking for payment on an old debt that you haven’t thought about in years. The collector may even offer a “special deal” like a 75% discount if you’ll make immediate payment.

What the collector won’t tell you is that the debt is legally noncollectable – meaning it is unenforceable in a court of law. The fact of the matter is that the debt is either outside the statute of limitations (too old to be legally collectible) or is in some other way legally noncollectible (such as having been discharged in bankruptcy). Since the debt is not legally enforceable, guilt and scare tactics are all the collector has to coerce you to make a payment.

Zombie debt collection is a very profitable business. Zombie debt collectors buy old debts for pennies on the dollar, then try to collect as much as possible. If the zombie debt collector buys an old $1,000 credit card debt for $20, and one phone call settles the debt for $100, the zombie debt collector makes a BIG profit.

Most zombie debt collectors are violating federal law just by calling you and attempting to collect an noncollectable debt. For instance, trying to collect a debt that was discharged in bankruptcy is a serious violation of the federal bankruptcy laws. Threatening a lawsuit for a debt that is past the statute of limitations is a violation of the federal Fair Debt Collections Practices Act (FDCPA). Zombie collectors not only rely on consumers’ ignorance of the law, they thrive on it!

Some individuals want to pay these debts. While admirable in intention, the result may be extremely harmful. Unpaid debts that have dropped off a credit report may be reported for another seven years after the payment date. That dead and gone debt may reappear as an entirely new (and legal) negative item on your credit report – and substantially harm your credit score.

If you are contacted by a zombie debt collector, here’s what you should and shouldn’t do:

• Do not give any personal information to the debt collector.
• Do not make any payments on the old debt until you learn what your rights are.
• Get advice from a knowledgeable attorney.

Remember, zombie debt collectors are the bottom feeders of the collection industry. They’ll do whatever they can get away with including lying, cheating and stealing just to make a buck.