If you’re facing a mountain of debt, you may not be able to list every debt you owe and to whom. It may be too difficult to think about.
This is a common occurrence. And it’s one of the reasons why “zombie debt” continues to thrive, unnoticed by a debtor but possibly on a collection company’s records. A determined collector can make a zombie debt feel very much alive.
What is zombie debt?
Zombie debt is generally a debt that someone once had but no longer owes. Typically, it has either been paid off or has passed the statute of limitations for collection. A debt that has been attached to the wrong person’s name can also be considered a zombie debt. Victims of identity theft or other fraud who don’t realize someone has charged a purchase or taken out a loan in their name can have zombie debts – particularly if they don’t watch their credit card statements or their card issuer doesn’t have strong identity theft protection tools. Zombie debt may or may not show up on a credit report.
How do zombie debts come to life?
There are multiple ways a zombie debt can “reanimate.” For example, if you make a payment on a debt that has expired, that will bring it back. You may even have a debt that was supposed to be discharged in bankruptcy that actually wasn’t – at least not correctly. Debts are regularly “sold” by one collection company to another. It’s possible that a debt you no longer owe for one of the reasons discussed has ended up in new hands, and collectors may pursue it.
How can you identify zombie debts?
If you’re receiving notices, phone calls or other communications about a debt you don’t recognize or thought you paid off, don’t make a payment – no matter how small – just to get a momentary reprieve. An attorney with the National Consumer Law Center says, “Even if you’re feeling pressure during a phone call, don’t agree to make even a $20 payment.” This could wake a zombie debt up and again make you liable for its payment.
You have the right to ask anyone seeking payment on a debt for a debt validation letter. This should contain information about the debt that will help you determine its true status. Don’t pay anything you’ve verified that you still owe the amount you’re told.
Having accurate information about your finances and your true debt is necessary to make an informed decision about what your best course of action is if you’re struggling with debt – including possibly filing for bankruptcy. By seeking legal guidance, you can make the best decision for your specific situation.