LENDNATION WIKI
Zombie Debt: Understanding Old Debts That Come Back to Haunt You
Have you ever received a call or a letter about a debt you thought was long gone or didn’t even recognize?
That’s what’s known as “zombie debt.” It can be confusing and a little scary, but understanding what zombie debt is can help you handle these situations better.
Zombie Debt Definition
Zombie Debt: Old debts that are past the statute of limitations or already settled but are resurrected by debt collectors trying to pressure you into paying.
What is Zombie Debt?
Zombie debt refers to old financial obligations that you might have forgotten about or that you thought were resolved, which suddenly reappear.
These debts can include unpaid loans, credit card balances, or medical bills that are no longer legally collectible because they’ve either been paid, discharged, or have expired under the statute of limitations.
How Does Zombie Debt Work?
- Sold to Collection Agencies: Often, original creditors sell off old debts to collection agencies for pennies on the dollar. These agencies then attempt to collect the debt, hoping to make a profit.
- Unexpected Contact: You might be contacted by debt collectors years after the original debt occurred, which can be surprising and unsettling.
- Statute of Limitations: This is a law that sets the maximum time after an event within which legal proceedings may be initiated. Once this period expires on a debt, it technically can’t be legally enforced.
Handling Zombie Debt
- Know Your Rights: Familiarize yourself with your rights under the Fair Debt Collection Practices Act (FDCPA), which sets rules on how collectors can contact you.
- Verify the Debt: Always ask for a written validation of the debt. This forces the collector to prove that you owe the money and that the debt is still valid.
- Be Cautious: Avoid making any payments or promises until you have verified the debt. Making a payment can restart the statute of limitations, making you legally responsible for the entire debt again.
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Summary
Zombie debt refers to old debts that resurface after being inactive, often due to being sold to collection agencies. Understanding your rights and the statute of limitations on debt can protect you from unfair collection practices. Always verify the validity of such debts before making any payments.
Read this blog for more information on how to reduce your debt.