Zombie debt can be a real problem, especially for people who are not aware of it. Zombie debt, also called phantom debt, is an old or expired debt that has been purchased by an investor or scammer at a huge discount. The investor or scammer will then try to get the debtor to pay back the money that they are not legally responsible for.
Most debts will no longer appear on your credit report after seven years. However, should a debt collector contact you, it is important to do your research and confirm that the claim is legitimate. Even when you are responsible for a debt, you may not be required to pay the full amount. By understanding what you are legally obligated to pay and what you are not, it becomes easier to identify debt collection scams, or better yet, zombie debts.
How does zombie debt work?
Debt collectors may try to contact you about expired debts, sometimes called “zombie debts.” These are debts that are no longer legally enforceable, but which the collector may be able to convince you to pay anyway. Because these debts can be purchased for very little money, collectors can make a profit even when only a small percentage of people agree to pay. Unless your state requires disclosure of the expiration date, you might not even know that the debt is no longer collectible. So, you might unintentionally do things that bring the debt back to life and make it possible to collect again.
Even though you may feel like you’re doing the right thing by paying off an old debt, you could be resetting the clock on that debt. That means the collector can sue you or report the debt to the credit bureaus, depending on your state’s laws. So before you take any action, make sure you understand the consequences.
Strategies zombie debt collectors use
Debt collectors, or “debt scavengers,” are known for their ability to cause anxiety and often attempt to deceive people into paying debts they don’t owe. Some common tactics they might use include:
- Ask you to pay a small amount and they’ll leave you alone. You don’t have to pay anything on a zombie debt, but debt scavengers may try to convince you otherwise. The Fair Debt Collections Practices Act (FDCPA) protects you from being harassed by debt collectors, and you can send them a written letter telling them to stop contacting you.
- Threaten with legal action if you don’t pay. Debt collectors may try to intimidate you by threatening to sue, but they have no legal basis to do so if the debt is time-barred.
- Verbally abuse or harass you. You don’t have to put up with debt collectors harassing you. The Fair Debt Collection Practices Act protects you from this type of behavior, and you can stop it by sending a letter to the collector telling them to cease communication. Don’t be scared – take action and put an end to the harassment.
- Lie and claim they are a litigation firm. Many debt scavengers will try to convince you that they are lawyers. However, most of them are not and they have no legal grounds to sue you or pursue payment for zombie debts.
Zombie debt collectors are relentless in their pursuit of unpaid debts. They have been known to use underhanded tactics to try and collect, including threatening legal action or wage garnishment. It’s important to know your rights when it comes to debt collections, and understand when you are responsible for the debt.
Debts that zombie debt collectors try to collect
There are many types of debts that debt collectors may try to collect, but some of the most common include:
Settled or discharged debts
After going through Chapter 7 bankruptcy, some debts may be discharged. This means the debtor is no longer legally responsible for repaying them. With a settled debt, there should be a written agreement stating that the debtor is no longer liable for the debt.
Debt collectors can only sue you for debt that is within the statute of limitations. This varies by state and type of debt, but usually ranges from three to ten years. Federal student loans are the only type of debt without a statute of limitations.
Debt that already fell off your credit report
A negative item on your credit report can stay there for up to seven years. However, making a payment on the debt, or even agreeing to do so, can reset the clock and allow the collector to report it again.
Debt that‘s not even yours
A debt collector could mistake you for someone else, the best way to protect yourself from identity theft is to be vigilant about your personal information. Don’t give out your Social Security number or other sensitive information unless necessary.
How to avoid zombie debt and protect yourself
To protect yourself from being scammed by zombie debt collectors, it is important to know your rights under the law. Do some research and familiarize yourself with what debt collectors are allowed to do and what they are not allowed to do. Here are a few tips to help keep debt collectors at bay.
1. Do your own research
The original debt may have been owed to you, or it may be your responsibility. You may be being charged for a debt that you don’t owe. Before assuming that the debt is yours, make sure that you have a record of it. Otherwise, you may have been contacted by mistake.
2. Request a debt validation letter
Before you attempt to pay off any debt, you should first confirm that the debt is yours. The best way to do this is to request a validation notice from the creditor, which will include information about the original creditor, the amount of the debt, and when the debt was incurred. Once you have this notice, compare it to your records to see whether the debt matches up.
3. Determine your next action
You can dispute a debt with a creditor by sending them a letter. To validate the debt, the creditor will need to provide proof that you owe the debt. However, without this proof, the creditor is likely to leave you alone.
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You can protect yourself from aggressive debt collectors by taking a few simple steps. First, ask the collector to send you verification of the debt. This will confirm that the debt is valid and that you are responsible for paying it. Second, send a letter to the collector asking them to stop contacting you. This will put an end to their harassment.
If you owe and can pay, the first step is to educate yourself on the Fair Debt Collection Practices Act (FDCPA), which protects consumers from unfair or abusive debt collection practices. With that knowledge in hand, you can then start negotiating with your creditors to settle for less than you owe. It’s important to get an agreement in writing, so the collector can’t sue you for the remaining amount.
There are several ways to view your credit reports for free. One way is to go to AnnualCreditReport.com. This website allows users to view one free report from each of the three major credit bureaus once per year.
You have to consider other options available to you if you find yourself unable to pay off a debt. One option is to try and negotiate a lower payment or payment plan with the debt collector. Another option is to simply not pay until you are able, even though this may hurt your credit score. Finally, filing for bankruptcy may be an option that would free you from the responsibility for your debts.
No matter what you decide to do, It is important to keep a written record of all correspondence with debt collectors, in case you need to take legal action. This way, you will have evidence to back up your claims.
When you find yourself in a difficult situation, it is important to take actionable, specific steps to improve the situation.
4. Ask the debt collector to stop contacting you
You have the right to stop a debt collector from contacting you. According to the Fair Debt Collection Practices Act (FDCPA), you can do this by sending the collector a certified letter. It’s a good idea to get a return receipt so you can confirm that the collector received your letter. The Consumer Financial Protection Bureau (CFPB) website has sample letters that you can use.
Debt collectors who violate the Fair Debt Collection Practices Act (FDCPA) by harassing or threatening consumers may be subject to enforcement action by the Consumer Financial Protection Bureau (CFPB). Consumers can also file a complaint with their state attorney general’s office or sue the debt collector in state or federal court.
5. Don’t share any personal information or admit to the debt
There’s no need to panic when you see a zombie debt on your credit report. In most cases, you can simply ignore it and it will eventually go away. However, in some states, you may be held legally responsible for the debt if you make a payment toward it or acknowledge that it’s yours.
How to prevent zombie debt
There are a few things you can do to prevent your debt from becoming “zombie” debt. First, make sure you are paying your debts on time and keep records of your payment history. This will help show that you’re making an effort to repay what you owe. Second, consider consolidating your debts into one monthly payment using a debt consolidation loan – this could help lower your overall interest rate.
The bottom line
Debt collectors may contact you about debts that have expired, been paid off, or don’t belong to you. You’re not legally responsible for repaying these debts. To find out whether a debt is yours or has expired, ask the collector for the age of the debt, or do your research. If you think an error was made, you can dispute the debt with the credit bureaus or the people who owe you money.
However, if the zombie debt does belong to you check your credit report to see if the debt is still listed. Even if it’s not yours, you may be able to negotiate with the original creditor or debt collector to pay less than what’s owed.