You may be asking, what on earth is a Zombie debt? Like the name implies, it’s an invoice or a debt for a personal charge that you thought was paid off but comes back to life to haunt you!
More specifically, Zombie debts include:
- debts you have already settled with the creditor company or debt collection agency
- debts that were discharged in bankruptcy
- time-barred debts you may have forgotten or overlooked that are past the statute of limitations
- debts that no longer show up on your credit report, generally after seven years
- debts you never owed, like debts resulting from identity theft
Here are some tips for dealing with a Zombie debt:
- Verify it’s a real debt. On occasion, suppliers and vendors are very lax in their billing procedures and charges might have fallen through the cracks, only to be billed way past the normal billing cycle. Perhaps you moved out of the country for quite some time and then moved back which allowed the supplier to locate you. It’s also very possible that this Zombie debt could have resulted from identity theft. Many times, a past due debt that has been handed to a collection company shows up on your credit report. Get a free credit report at annualcreditreport.com and see if the debt is listed there.
- Know your rights. If someone contacts you about a debt you thought was paid, you can ask the collector to send you a written validation notice detailing the amount owed, and the creditor’s name. By law, a debt collector has to send you this notice within five days of contacting you.
- Don’t ignore lawsuits. If a debt collector files a lawsuit against you to collect a Zombie debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.
- Don’t accidentally reset the debt clock. If you make, or promise to make, a debt payment on a time-barred debt — a debt too old for a collector to make you pay — the statute of limitations clock may reset, and a debt collector can then sue you for the full debt amount, plus interest and fees.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Source: Amy Hebert, Consumer Education Specialist, FTC
