Zombie Debt – How to Deal with them
What should you do when you get a collection call or letter for a debt you could swear that you don’t owe? Whether it’s an erroneous account that was removed during credit repair, something you’ve paid in full or a debt that’s been charged off, these phantom debts can come back to haunt you. Luckily, there are ways to send them back to the grave.
How Does Zombie Debt Happen?
When a consumer defaults on debt, the original debt owner can sell it to a collection agency. These agencies usually pay only pennies on the dollar. If they can collect anything at all, they can usually make a profit. And, if they fail to collect on the debt, they can just go ahead and sell it to someone else.
But, with all of these debts being shoveled from one collection agency to another, it can be hard for collectors to keep their records up to date. Some debts are resold even though they are past the statute of limitations. In other cases, the debt collector’s records will not reflect that a debt was canceled during bankruptcy. As a result, these debts can pop back up years after they have ceased to be your responsibility. They can lower your credit rating and get in the way of home purchase plans.
What Is the Best Way to Handle Zombie Debt?
If you get a collection call about a debt that you do not feel that you owe, do not discuss it over the phone. Get a mailing address for the collection company and then hang up the phone. Unscrupulous debt collectors can try to make you take responsibility for the debt, so, telephone conversations are not worth it.
Instead, write a letter requesting written verification of the debt. They must provide this within 30 days and are not permitted to pursue collection until they have verified what you owe. Do not pay a debt collector to stop harassment. This can be construed as admission that the debt is legitimate, and can lead to further harassment.
If they cannot prove that you are legally responsible for the debt, they are not entitled to collect. While there is no law against them contacting you in writing, you can safely ignore most contact. The exception is if they send a notice saying that you are being sued. In this case, you need to show up in court, if only to maintain that the debt is not yours.
How Can You Fight Back Against Bad Collection Agencies?
Check your credit report regularly to make sure that old or discharged debts have not been improperly reported. If a debt collector reports a debt to credit monitoring agencies or tries to sue you after the statute of limitations, that is a violation of federal law. Report them to the Attorney General in your state. You may be entitled to damages.
Always make it clear to debt collectors that you know your legal rights. They are less likely to pursue you if they know that you cannot be tricked into paying a debt that you do not owe.