Zombie debt refers to old debts purchased by a collection agency. Maybe you defaulted on a bill many years ago due to financial problems. After several months, the creditor probably wrote off the debt and stopped collection attempts. But sometimes, collection agencies purchase old debts from creditors for pennies on the dollar. If this happens, a collection agency may start calling you for repayment of an old debt. They may use a variety of tactics to get you to pay up, but you don't have to pay an old debt. Here are seven steps for dealing with zombie debt.
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1. Don’t Acknowledge the Debt
If you're dealing with zombie debt, do not acknowledge the debt. If you admit that you owe the debt, you're giving the collection agency the green light to harass you and send threatening letters.
2. Ask Creditors to Stop Calling
According to the Federal Trade Commission, collection agencies cannot harass you or make false claims. You have rights, and debt collectors cannot call outside the hours of 8 AM and 9 PM your time. They cannot contact you at work, and verbal abuse is unacceptable. If a debt collection agency violates your rights, tell the company to stop calling. If they continue, report the agency to the Federal Trade Commission.
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3. Get It in Writing
If a collection agency continually harasses you about an old debt, ask the company to send written proof that you owe the money. By law, the agency must respond to your request within 30 days, or cease collection attempts. If the agency does not send proof, yet continues to call your home or send collection letters, notify the FTC.
4. Check the Statute of Limitations for Your State
A statute of limitations is a deadline for filing a lawsuit. Therefore, once a certain amount of time passes, a creditor cannot sue for repayment of an old debt. If you’re dealing with a zombie debt, research online the statute of limitations for your state. Understand, however, that acknowledging an old debt resets the statute of limitations clock.
5. Explain Why You're Not Responsible
A collection agency may request payment for a debt that you don’t owe. Rather than shrug off the issue, explain why you don't owe the money. Maybe you paid the original creditor in full. Go through your financial records and pull returned checks or receipts to show proof of payment. You can also contact the original creditor to straighten out the issue.
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6. Watch Your Credit Report
Some creditors and collection agencies are sneaky and report zombie debts to the credit bureaus. If you're contacted about an old debt, watch your credit report closely. You can sign up for credit report monitoring, which sends an email alert any time new information appears on your credit report. If a creditor reports a zombie debt after the statute of limitations in your state, contact the credit bureaus to dispute the update.
7. Get an Attorney
Some collection agencies play hardball. If you do not owe a debt, or if the debt exceeds the statute of limitations in your state, consult an attorney. Sometimes, it only takes one letter from a lawyer to get a creditor or collection agency off your back.
As a consumer you have rights, so don't let a collection agency or creditor trap you into paying a zombie debt. Stand up for yourself and be proactive about the situation. What are other ways to deal with zombie debt?
