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What the BBB says you need to know about zombie debt

Have you ever heard of “zombie debt”? It’s debt that creditors bring “back to life” -- and could be money you never even owed.

The Better Business Bureau said that zombie debt can be connected to old debt after a debtor files for bankruptcy, simply can’t pay or can’t be found.

Creditors often remove old debt from their ledgers and sell it to third-party collectors. In some cases, the debts are legitimate, but in other cases, they aren’t.

When debts are sold and re-sold, the records may be incomplete or inaccurate. Think of it as a game of “telephone,” the BBB said. The more times a debt is passed around, the more chance that the related information is wrong.

Some of the most common zombie debt scenarios, according to the BBB are:

  • Unpaid debts that are beyond the statute of limitations when you can be taken to court for payment
  • Unpaid debts you owe but forgot about
  • Unpaid debts wiped out with bankruptcy
  • Debts you already settled with the creditor
  • Fraudulent charges from identity theft
  • Fake debts “creditors” claim you owe as part of a scam

When debt collectors call

The BBB said legal treatment of old debt will depend on where you live and the type of debt in question. Depending on the law, debt collectors are not allowed to sue for old debt if the statute of limitations has expired, however, they are still allowed to contact you and ask to pay off the old debt.

Check the statute of limitations for each U.S. state and Canadian province for more information.

However, if you start to make payments or acknowledge the debt in some way, the action may restore the collection agency’s legal right to take the matter to court. Never agree to make a payment on a debt you aren’t sure about, even if the collection agency puts pressure on you for payment.

The best way to start is by doing a thorough investigation. Search through old records to find bank statements and notices of payment. Gather as many facts as possible about the debt in question.

Next, within 35 days of initial contact and without acknowledging the debt is yours, ask the creditor for a debt validation letter. The Fair Debt Collection Practices Act (FDCPA) requires the debt collection agency to provide you with written proof of the debt’s validity or a judgment against you, as well as the name and address of the original creditor if the debt was resold.

Once this information is gathered, determine if the debt is really yours and if it still needs to be paid.

For more information or what route to take based on your circumstances, click here.


About the Author
Francine Frazier headshot

A Jacksonville native and proud University of North Florida alum, Francine Frazier has been with News4Jax since 2014 after spending nine years at The Florida Times-Union.

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