Zombie Debt

Zombie debt describes a debt that was once settled but has been revived by collection agencies.  This can happen for a number of reasons, but in some cases, the reasons are nothing more than illegal and unethical practices by collection agencies. 

Zombie debt can be created when a collection agency illegally attempts to bully a former debtor into re-paying a debt that has already been settled, paid, discharged, or forgiven.   They may also attempt to collect on a debt after the statute of limitations has expired. 

A more blatant example of how zombie debt is created includes collection agencies fraudulently changing the age of a debt on a credit report so that the debt appears new to the credit bureaus.  Marking a debt as new allows the seven year limit of debt reporting to be extended, placing pressure on the consumer to pay.

A person can protect themselves from zombie debt by saving any and all documentation showing that a debt has been paid, from copies of checks and bank statements to confirmation of payment receipts from the original creditor.  This can be used as evidence if a case goes to court to show that the new collection agency had no right to attempt collection of the settled debt.

If a debt was not paid but the statute of limitations on a debt has expired, collection agencies have little to no chance of being awarded any cash.  If collection attempts continue after the statute of limitations has expired, write to the collection agency via certified mail return receipt requested and demand that collection attempts stop.  It is important for the writer of the letter to state in the letter that no debt is owed because of one of the reasons mentioned above.

It is important for consumers to remember that a statute of limitations can be extended if any additional payments are sent to a collection agency out of “good faith” or in an attempt to remove derogatory information from a credit score.  Some collectors may ask for a good faith or final settlement payment just so the statute of limitations can be extended and full collection efforts can be re-initiated, but they won’t tell the consumer that.  Never make any payments toward any debts that you know have been charged off, paid, settled, etc.

Federal debt collection laws require collection agencies to provide verification of a debt upon request, but only if the request is in writing and is made within 35 days of first contact between collector and consumer.

If the collection agency can’t verify the debt, the consumer is not required to pay. 

Collectors that attempt to collect money which they are not authorized to collect are more than likely in violation of state and / or federal debt collection practice laws.  If a consumer continues to be harassed over zombie debt, it is recommended that they contact a finance / debt attorney who will better be able to apply legal pressure to the collection agency to immediately cease all collection efforts.