What is Zombie Debt?

Zombie debt. It’s a term that sounds scary and it’s used to describe a phenomenon that can be scary for someone who believes a debt to be a thing of the past. How does a debt come back to life – like a zombie?

In the credit world, debts are often sold to third-party financial institutions by the original lender. When this occurs, that debt can be revived and result in the borrower facing a whole new round of collection harassment. It’s important you not panic if you are contacted out of nowhere about a debt that is years in the past. Instead, gather as much information as possible about the debt by asking questions of the collections caller, but do not provide any information to the caller. It’s important you not say or do anything that could truly bring the debt back to life and make you responsible again for paying it.

Is the Debt Legitimate?

The first thing you need to do if you are contacted about an old debt is verify it is valid. The law gives you 30 days to verify a debt after you’ve been contacted by making a request in writing. The debt collector will then need to verify the debt by sending you copies of the original documents associated with the debt, as well as information about the amount you owed when they purchased the debt.

If the collector fails to send you validation within 30 days of receiving your request for verification, they are not permitted to add it to your credit report. If an invalid debt is already on your credit report, you’ll need to submit a request to the credit bureau(s) to have it removed.

Make sure you keep track of your credit report and review it at least on an annual basis. This prevents debts that are not legitimate from damaging your credit and costing you lending opportunities.

Zombie debt can be an issue in a non-legitimate debt situation, but it can also be a problem if you have paid off a debt or the debt has expired. You’ll want to monitor your credit report for all instances of zombie debt.

How Do You Know a Debt Has Expired?

If the revived debt is legitimately yours, you’ll need to check the statute of limitations in your state to determine if collection efforts can still be made against you. Each state has a limited amount of time in which a debt collector can utilize the court system in their favor. They still have the option of filing a lawsuit if the statute of limitations has passed, but it’s unlikely to hold up in court. You can check out the state-to-state statutes of limitations on Bankrate.com

In some cases, you’ll need to send a cease and desist letter to end debt collection efforts after the statute of limitations has passed. This letter can also control contact with you even if a debt is still legitimate.

Are you suffering a zombie debt attack? If an old debt of yours has suddenly come back to life and is wreaking havoc on your financial situation, R. Flay Cabiness, II, P.C. can help. Contact one of our offices at (912) 554-3774 (Brunswick, GA); (912) 375-5620 (Hazlehurst, GA) or; (912)-554-3756 (Jesup, GA) for more information.