What Is Zombie Debt And How Does It Work?
If you have a debt collection agency contact you about an unpaid debt, you may be in a zombie debt situation.
Here’s how this scenario might play out: First, the original creditor is unable to collect on a debt. Then, a debt buyer pays pennies on the dollar owed to pursue this debt. Next, the debt buyer sells the old debt to yet another collector who pursues the debtor.
These debts aren’t always legitimate. Zombie debt collectors are sometimes called debt “scavengers” because they’re prone to demand payment for credit cards you’ve never had or utility bills from homes you’ve never lived in. The zombie debt collectors’ pursuit of you could be the result of you experiencing identity theft.
Debt buyers may also try to collect on your settled debts. Proving that you don’t owe money on an account can be difficult, especially for debts that are years old. Not many people keep canceled checks or other documentation for that long.
The law may be on your side, though. Collectors may need to prove that you actually owe money before coming after you. Unfortunately, it’s not uncommon for zombie debt collectors to use legally and ethically questionable methods.
The Statute Of Limitations On Debt
According to the Consumer Financial Protection Bureau (CFPB), creditors and debt collectors have a limited time frame to recover debts. This statute of limitations varies by type of debt, state law and whether the state laws apply according to your credit agreement. In many cases, the statute of limitations is 3 – 6 years.
Once the statute of limitations passes, the debt becomes a time-barred debt. Typically, the statute of limitations begins when you fail to make a required payment.
Making even a small payment on a zombie debt can reset its statute of limitations. Often, a debtor may also have to raise the statute of limitations as a defense.
