Maybe you paid it. Maybe it’s just so old you don’t even remember it. Or maybe it doesn’t even belong to you, just someone who shares your name.
Whatever the cause, it’s a zombie debt, a debt that’s hard to slay because it just seems to keep coming back. And it can be some of the nastiest debt you’ll ever deal with.
As Philadelphia bankruptcy attorneys we feel it’s extremely important for you to understand this phenomenon, and to understand your rights when you find yourself confronted with walking dead debts. Here’s what you need to know.
What is a zombie debt?
Zombie debts are a result of the third-party debt collection industry. Specifically, they happen because of debt buyers, companies who buy a portfolio of debts for pennies on the dollar long after the original owner of that debt has written it off and obtained the tax benefits for it.
If they can collect the debt, they get to keep every penny on their investment. If they can’t, they take a loss.
And since buying these portfolios commonly means simply getting a spreadsheet or a database with details about debts and debtors inside, they pave a way for collectors to break the law. After all, as long as they’ve still got the information they can keep changing their name and moving around to stay one step ahead of regulators. This frees them to violate the FDCPA so they can try to intimidate or trick you into paying the debt.
The method of buying these debts also means they are far past the statute of limitations, which means you can’t be sued. There is literally no reason to pay them at this point, since the original company has already reaped its reward and there are no consequences for not doing so. They can’t even put these debts on your credit report, though they certainly try. By all legal rights these debts should be “dead,” but somehow creditors are still harassing you about it anyway.
And since a spreadsheet is a terrible way to keep accurate information, and third-party debt buyers sell these debts to each other, they can even target people who don’t owe the money in the first place.
Careful! Zombies are dangerous.
Given this description it would be reasonable to assume you’ve little to worry about from a zombie debt other than some irritation. But you’d be wrong. One misstep can reactivate the statute of limitations, which means you would once again be legally liable for the debt.
To avoid this:
- Don’t speak to debt collectors at all. Send a certified letter demanding they verify the debt in writing the moment you get the first communication via mail. You should also forbid them from contacting you over the phone either at your home or workplace.
- Keep in mind they must provide the name and address of the original creditor to verify the debt. Often, they do not have this information.
- Avoid making any payment arrangements. Pay back as little as one cent, and you start the clock once more.
Keep in mind a collector who contacts you about a zombie debt may not have any real expectations of getting you to pay it over the phone. If he or she can trick you into resetting the clock the idea may be to sue. They’re hoping you’ll ignore the summons so the court can force you to pay. Zombie debt collectors count on the average consumer’s tendency to simply ignore debt lawsuits because they don’t know what else to do.
You have rights.
If you’re dealing with zombie debt, have caught them violating the FDCPA, or just can’t get rid of the problem, call us. We’ll be happy to help. And if zombie debt is chasing you while current debts continue to destroy your life, schedule a free consultation today. Bankruptcy may be the answer to both problems, an answer which will keep that corpse in the ground for good.