What is Zombie Debt?

Every day, people buy spreadsheets for huge sums of money.

On the spreadsheets: names, phone numbers, sometimes addresses. Creditor names. And dollar figures, supposedly representing an amount known to those creditors.

The third-party debt-collection industry buys as many of these spreadsheets as possible, at “pennies on the dollar” price points compared to the amount owed. Then, they call people up and try to get them to pay up.

Some aren’t even sitting at a formal business location. They’ve set up shop at a kitchen table, or in a local coffee shop.

Of course, not everyone they’re calling owes the money. Sometimes they have similar names to the original debtor, and never had the debt at all. Sometimes the debt is real, but they paid it off a long time ago, writing checks either to the original creditor or to some other collection agency.

Sometimes the debt is legitimate, but is so far past the statute of limitations that it’s essentially lost its teeth. The original creditor wrote off the debt long ago, and you can’t be sued for it…unless you make the mistake of doing something which restarts the statute of limitations, something these third-party debt buyers very much hope that you do.

Many will even indulge in underhanded tactics to get the job done. Third-party debt buyers have a habit of changing their business names and launching new businesses in new states to dodge regulators, making it easier for them to violate the Fair Debt Collection Practices Act.

Often, they don’t even expect most of these debts to get paid. They’re just hoping to trick as many people as possible. Some are hoping borrowers will ignore court cases so they can win a summary judgement and force wage garnishment.

The moment you pay them a penny, you restart the statute of limitations, a clock which usually starts running from the date of your last payment.

What’s your recourse should zombie debt collectors come calling?

First, keep in mind you don’t have to speak to any creditors. You can always send them a certified letter telling them to verify the debt in writing. Your certified letter should include a demand that they contact you only by mail. While many debt collectors will ignore the demand, letting people know you know your rights could keep them off the phone.

Force them to cough up the name and address of the original creditor. Use this information to verify the debt against your own records.

Don’t pay them, and don’t make arrangements of any kind.

If you find you’re being sued, contact a lawyer immediately. Often, it’s more than possible to fight these cases in court…if you show up.

If the zombie debt collector is just one of dozens of people who are calling you about past-due bills, then you need to consider another strategy: wiping out your debt. Bankruptcy can help you get rid of any legitimate debt you might owe, and can kill zombies for good. 

Filing means you don’t even have to answer the phone anymore. Unless you take on new debt after your discharge, anyone who calls you after bankruptcy is likely to be a scammer. 

In the meantime, you can enjoy the peace-of-mind that comes from getting a financial fresh start.

See also:

This Letter Template Will Get Debt Collectors Off Your Back

4 Things to Do Before Paying a Debt Collector

Is it Ever a Good Idea to Settle a Debt?

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