How to Ward Off “Zombie” Debt

When debt comes back from the past to attack living debtors, many debtors are unclear on their rights and the statute of limitations in regards to “zombie” debt, or debt typically purchased by debt buyers in which the window of collections has expired.  In general, “zombie” debt refers to debt over 10 years old that has been deemed unclaimable to collection agencies by credit card companies and health care providers. However, debt buyers are rounding up zombie debt for pennies on the dollar, using scare tactics ranging from phone calls to lawsuits, primarily because of the significant margin they receive if collected.

In the process of this aggressive collection, zombie debt can actually revive itself into legitimate debt to the chagrin of the collectors, often because individuals are unclear about their rights in regards to it.  In the event you are sued for an old debt that is beyond the statute of limitations and do not respond, the collector may render a default judgement in court, thereby resurrecting the dead debt into valid current debt that can be used to garnish wages and bank accounts.  Additionally, with incessant phone calls the debt buyer may coerce the debtor into making a small, symbolic payment on the debt, therefore acknowledging the debt and making it once again valid.

How can you ward off zombie debt? With the assistance of an attorney, in most states a file can be made against the debt buyer in a statute of limitations counter-suit.  With the guidance of an attorney, the potential savings depending on the dollar amount of the claim against the debtor can save big money and big headaches.  It is also critical to not sign anything or make a payment without first contacting an attorney.

It is important to know the difference between valid debt and “zombie” debt that is past the statute of limitations for collection, and the professional guidance of an attorney in these matters can better represent your rights and pocketbook.

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(10-24-11, RN, tl)