Zombie Debt
You may have to kill old debts that resurrect and come back to life. Junk debt buyers and collection
agencies will purchase old, often outdated debts for pennies on the dollar and come after you for
payment of these old debts. These outdated debts are known as zombie debt.
agencies will purchase old, often outdated debts for pennies on the dollar and come after you for
payment of these old debts. These outdated debts are known as zombie debt.
Debt buying has emerged into a multi-billion dollar industry in the past
several years. Junk debt buyers can be small businesses to large,
publicly traded Wallstreet companies and the characters involved in
this lucrative business are banking on the consumer not knowing their
rights. If you are contacted about an old debt or a debt you are
unaware of, here are a few things you can do:
1. Do not acknowledge you owe the debt
Simply acknowledging the debt or agreeing to pay a portion of the debt
can ruin your credit. Negative marks can stay on your credit for up to 7
years. By paying a portion of that debt you restart the 7 year clock. If
you are nearing the 7 year mark it may be best to do nothing at all. Let
it drop from your credit reports.
2. Ignore the phone calls completely
Talking to them may open up a can of worms. Speaking with debt
collectors may end up restarting or extending the statute of limitations
on the debt in addition to restarting the time period a negative mark
can stay on your credit. Remember, if the statute of limitations has run
on a debt you cannot be sued for that debt. See Statute of Limitations.
several years. Junk debt buyers can be small businesses to large,
publicly traded Wallstreet companies and the characters involved in
this lucrative business are banking on the consumer not knowing their
rights. If you are contacted about an old debt or a debt you are
unaware of, here are a few things you can do:
1. Do not acknowledge you owe the debt
Simply acknowledging the debt or agreeing to pay a portion of the debt
can ruin your credit. Negative marks can stay on your credit for up to 7
years. By paying a portion of that debt you restart the 7 year clock. If
you are nearing the 7 year mark it may be best to do nothing at all. Let
it drop from your credit reports.
2. Ignore the phone calls completely
Talking to them may open up a can of worms. Speaking with debt
collectors may end up restarting or extending the statute of limitations
on the debt in addition to restarting the time period a negative mark
can stay on your credit. Remember, if the statute of limitations has run
on a debt you cannot be sued for that debt. See Statute of Limitations.
3. Stop the calls
If the telephone calls continue, immediately write a letter, certified, return receipt, demanding the
collection agency cease all telephonic contact with you. Make sure you clearly state in the letter
that you do not agree you owe the debt nor are you acknowledging you owe the debt. Federal
law dictates collection agencies must comply when you request they do not contact you via
telephone.
4. Check your credit reports
Collection agencies will often stoop to low, illegal tactics to get you to pay a debt. Watch out for
re-aging of the old debt on your credit reports. The collection agencies will report the old debt to
the credit bureaus as a new debt and try to extend the seven-year reporting limit on negative
items. Remember, negative items such as late payments and charge-offs can only be reported
on your credit report for 7 years. Bankruptcies can be reported for 10 years and unpaid tax liens
can stay up to 15 years.
5. Debt Validation
Request the collection agency validate the debt. Debt validation forces the debt collector to
produce a copy of the original signed contract such as the credit card agreement and the
account history of the debt. They cannot simply produce some printed copy of their bill or
invoice, it must be from the original creditor. Also, request proof they are licensed in your State to
perform debt collection. If the collection agency cannot produce proof you owe the debt, they are
violating the Fair Debt Collection Practices Act and can be sued. And, any negative entry they
reported to the credit bureaus regarding this debt must be removed from your credit reports.
6. Negotiate cautiously
If you want to pay the debt, be very careful in your negotiations and get everything in writing.
Remember the collection agencies purchased the debt for pennies on the dollar so anything you
offer over that amount is all profit. You want to proceed with intense caution because collection
agencies are tricky. Debt collectors may settle for a smaller amount then turn around and sell the
remaining debt to another collection agency or even worse, the collection agency could report
the remainder of the debt to the IRS as “income”. See Debt Settlement for more information.
7. Beware of false promises by the collection agency
Not surprisingly, some debt collectors use dirty, underhanded tactics to collect debt. Many simply
lie to the consumer and promise to remove negative credit entries in exchange for payment.
Know your rights and get everything in writing. Always negotiate a full deletion of any and all
negative entries reported on your credit report of this debt. Cover your bases and make sure the
debt collector is not going to sell the unpaid portion of the debt to another company.
If the telephone calls continue, immediately write a letter, certified, return receipt, demanding the
collection agency cease all telephonic contact with you. Make sure you clearly state in the letter
that you do not agree you owe the debt nor are you acknowledging you owe the debt. Federal
law dictates collection agencies must comply when you request they do not contact you via
telephone.
4. Check your credit reports
Collection agencies will often stoop to low, illegal tactics to get you to pay a debt. Watch out for
re-aging of the old debt on your credit reports. The collection agencies will report the old debt to
the credit bureaus as a new debt and try to extend the seven-year reporting limit on negative
items. Remember, negative items such as late payments and charge-offs can only be reported
on your credit report for 7 years. Bankruptcies can be reported for 10 years and unpaid tax liens
can stay up to 15 years.
5. Debt Validation
Request the collection agency validate the debt. Debt validation forces the debt collector to
produce a copy of the original signed contract such as the credit card agreement and the
account history of the debt. They cannot simply produce some printed copy of their bill or
invoice, it must be from the original creditor. Also, request proof they are licensed in your State to
perform debt collection. If the collection agency cannot produce proof you owe the debt, they are
violating the Fair Debt Collection Practices Act and can be sued. And, any negative entry they
reported to the credit bureaus regarding this debt must be removed from your credit reports.
6. Negotiate cautiously
If you want to pay the debt, be very careful in your negotiations and get everything in writing.
Remember the collection agencies purchased the debt for pennies on the dollar so anything you
offer over that amount is all profit. You want to proceed with intense caution because collection
agencies are tricky. Debt collectors may settle for a smaller amount then turn around and sell the
remaining debt to another collection agency or even worse, the collection agency could report
the remainder of the debt to the IRS as “income”. See Debt Settlement for more information.
7. Beware of false promises by the collection agency
Not surprisingly, some debt collectors use dirty, underhanded tactics to collect debt. Many simply
lie to the consumer and promise to remove negative credit entries in exchange for payment.
Know your rights and get everything in writing. Always negotiate a full deletion of any and all
negative entries reported on your credit report of this debt. Cover your bases and make sure the
debt collector is not going to sell the unpaid portion of the debt to another company.
Zombie debt may include
outdated past debts,
charged-off debt, debt
included in bankruptcy,
debt you may have never
owed and even debts
incurred due to identity
theft. Many of these
debts are well past the
statute of limitations and
uncollectible.
outdated past debts,
charged-off debt, debt
included in bankruptcy,
debt you may have never
owed and even debts
incurred due to identity
theft. Many of these
debts are well past the
statute of limitations and
uncollectible.
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The debt buying industry is growing by leaps and bounds. Some of the debt has long
been written off and often uncollectible under the law. Learn how to deal with old debt
that comes back to haunt you
by Lisa Phillips
been written off and often uncollectible under the law. Learn how to deal with old debt
that comes back to haunt you
by Lisa Phillips