Zombies Play Gotcha! How Debt Collectors Keep Old Debts Alive
Zombies aren’t something we want to hear about – ever- and if we do, we only want to hear about them in the movies.
At some point in your life, you may have failed to pay a bill on time, leading to a barrage of calls from debt collectors. Over a few years, the calls wane because there are only so many years in which collectors can sue you to collect the debt.
You may think you’re in the clear, but don’t get too comfortable. An obscure, yet growing, subset of collections could cause the calls to start right back up. It’s called Zombie debt.
Zombies can be a consumer’s worst nightmare
The ominous name literally refers to debt that is resurrected after the statute of limitations to sue to collect has ended. It also includes debt that may have been discharged through a bankruptcy filing or debt that’s not even yours.
Those trying to collect this debt are often not legitimate, however, there are cases in which you could play a role in resurrecting this debt.
Here, we’ll discuss Zombie debt in detail. We’ll tell you how to watch out for it and how to understand your rights when it comes to bill collectors who may come after you in violation of consumer credit laws.
Zombies and debt
Let’s say that about 10 years ago, you opened an account at a jewelry store and purchased a diamond necklace. You made the scheduled payments for months, but eventually, for whatever reason, you stopped paying.
The account was eventually closed and sent to a collection agency. That collection agency has six years to get you to pay up before the item drops off your credit report. Depending on the state you reside in, the number of years could be even fewer.
If the agency is unsuccessful in suing to collect the debt before the statute of limitations runs out, so be it, in most cases. However, there is an increasing number of cases in which the debt is purchased from another collection agency.
These agencies can be considered bottom feeders because they are literally scavenging for debt. These agencies buy the debt for pennies on the dollar, so getting people to pay up is the priority. They can make money by collecting even a small portion of the debt.
Spotting Zombie scavengers
The collection tactics by these Zombie debt collectors can be even fiercer than those used by the original bill collectors. They thrive on intimidation and scare tactics to get people to pay up. In some cases, their desperation to recover any amount likely violates consumer protection laws.
However, don’t despair. This could be a good thing because their antics can help you easily spot them and respond accordingly.
Understand that bill collectors have six years to sue you to collect an outstanding debt. Again, the time period could be shorter depending on the state you reside in. After that time period is up, the debt is still collectable, but you can’t be sued. This is how debt becomes ‘zombies.’
Be suspect of any debt collection calls you receive after this time. Scavenger debt collectors may tell you that you can still be sued. This is a red flag; it’s a lie.
Another red flag relates to demands to settle the outstanding debt for a smaller amount. The start up of the harassing calls again may be driving you nuts so you give in and just pay something thinking that will satisfy the obligation.
Wrong!
Resurrecting Zombies all on your own
Any payment you make on an outstanding debt essentially resets the clock. Understand that the statute of limitations for delinquent debt starts on the last date of activity, i.e. a payment. By giving in to these scavengers, you are unwittingly resurrecting the debt.
Not only does the seven-year clock start up again, but the delinquent item could end up back on your credit report. Zombie debt collectors know this and that’s another reason they are relentless in getting you to “just pay something.”
Some warn even that if you pay off zombie debt completely, it could ironically hurt your credit score. That’s because it could show up on your credit report as a bad debt and be seen as a late payment!
Extra sneaky
Debt collectors are known for their savviness, and their methods can be downright devious.
One example relates to debt collector Jefferson Capital Systems. In 2008, it offered credit cards to people with old debts. Instead of getting new credit cards, the borrowers were enrolled in a repayment program to pay off their debt. The scheme raised the ire of the Federal Trade Commission.
In another example that shows unscrupulous practices, a debtor had to go to court to fend off the collector. In a report by The Washington Post, debt collector Rausch Sturm was called out for its handling of a delinquent account.
The firm was able to sue the debtor, a woman, and garnish her checking account to collect. The company had taken just 19 cents from her account in 2016 before she challenged the court order, according to The Post.
The firm dropped the suit but then sued again in 2018. Astoundingly, it claimed that the 19 cents it garnished allowed it to continue to pursue the debt. It was banking on changing the date of the last payment from 2013 to 2016 as giving it grounds to collect because the statute of limitations clock had been reset.
That case is ongoing but is an example of how consumers must be very cautious in dealing with debt collectors.
Handling the scavengers
Once you’ve determined you’re dealing with a scavenger debt collector, you can put yourself in the demand position. Instead of giving in to their demands, you can give them demands.
First, don’t even acknowledge that you owe, or that the debt is yours. There are cases where it could be erroneous. Even if it is your debt, acknowledging it gives that collector evidence to further pursue you.
Ask them for their address so you can put your instructions in writing on how they should proceed in dealing with you. MoneyCrashers advises that you send a certified letter to the debt collection company within 35 days of their contact. Dispute that you owe the debt and ask them to prove that you do owe it.
Wrapping it up
Just because you have delinquent debt doesn’t mean you must tolerate unscrupulous collectors. After six years, it’s over. Your credit has been damaged, and likely your pride. There’s no reason that you should continue to be subject to collectors.
Zombies debt may be something foreign to you. But understand, you need to know about it because it may still be collectible. Still, you can’t be sued for it, and that is key. At the end of the day, Zombie debt should be treated for what it is – dead.
Contact DebtAdvisors for help.