Talk to a debt counselor toll free:800-300-9550
Our Clients Rate Us Excellent
Based on 3234 reviewsTrustPilot Reviews
The debt collection industry is a nasty business indeed. While there may be legitimate companies out there who are trying their best to follow the rules, you cannot erase the fact that the abusive ones outweigh the good ones.
There are many things that debt collectors don’t want you to know and one of them are known as zombie debts.
What are zombie credit accounts?
What exactly are zombie debts? These are old debts that had been abandoned by debtors, creditors have given up on and have passed the statute of limitations. When a debtor fails to pay their credit obligations and the 6th month mark had passed, this is usually charged off by the credit company. This means they have given up on collecting profit from that debt. It will be written off as a loss on their books. When the debt passes the statute of limitations, that debt will be considered uncollectable.
This is where debt collectors come in. A lot of them purchase these old debts for a very low price. What they will do is try to chase down the consumers who owe the money. If they convince the debtors to pay even a part of the debt, they will be getting some huge profits for it.
But here are a couple of important facts that you need to know about zombie debts.
Most of these zombie debts are past the statute of limitations.
Debt collectors wish to earn profit from this because they can buy the debt at a very low price from the original creditor. The low price is because the debt is considered uncollectable already.
When a debt is past the statute of limitations, you are still responsible for the debt you owe. The collector can still collect the debt but they are allowed to file a legal suit against you - in case you refuse to pay up.
Debt collectors will trick you into acknowledging the debt because it will restart the statute of limitations. That means they will regain the right to collect and sue you for that debt amount.
Some people give in because of the pressure from the abusive and harassing behavior of the collector. In that case, the collector wins and profits from the whole event.
It is with these zombie debts that debt collectors get their notorious reputation. You have to understand that they will drive you to feel guilty, threaten you with a lawsuit, and telling you all sorts of bluffs. If you know that you are past the statute of limitations, you will know that these are just words. If you make just one payment, it ceases to become a zombie debt and it will be considered as a fresh debt on your credit report. Instead of being pushed past your credit report as an old debt, it will be reflected once more and can ruin your credit rating.
Most people will think that old debts should be ignored but you must not just into conclusions. There are things that you need to know about your debts before you make the decision not to act on this.
What to do when your are being collected for an old debt?
When you are called by a debt collector for a zombie debt, here are the things that you need to do.
When you receive a phone call, and you know that it is a debt collector asking you to pay for an old debt, you do not have to say anything or give out any information. Never acknowledge the. Instead, simply ask for the address of the collections agency.
Send that collections agency a formal letter asking them to verify the debt that one of their collectors called you for. Make sure there is a return receipt so you have proof of when their received your letter.
You should not receive any calls or communication efforts until the collector has sent their response.
If they send back a response, keep it safe.
Send a dispute letter if the debt is not yours. Ask them to show proof that the debt is yours. Until they do, you should not be bothered with the debt.
If they persist, you can send them a letter asking them to stop calling or communicating with you unless it is to tell you that they will be filing a lawsuit against you. If the debt is beyond the statute of limitations, you should not hear from them again.
It is very important that you educate yourself about the FDCPA or Fair Debt Collection Practices Act. You can get information about this law from the Federal Trade Commission (FTC) website.
The FDCPA provides consumers with the following issues:
The collector cannot sue you over a debt that had been inactive for six years - in some states, even less.
Inactive debts must also be removed from your credit report after 7 years.
Debt collectors are prohibited from providing false information, or delivering threats that are only meant to scare you into paying a debt.
Any cease and desist letter from the debtor must always be honored.
Collectors are not allowed to report a zombie debt to credit bureaus.
In case the debt collector is in violation of these laws, you have every right to file a complaint against them. You can do it through the FTC website, the Better Business Bureau or the local office of your State Attorney General.