Treece Talk Blog

"Zombie debt" is older debt typically written off as bad debt by the original creditor and sold to collection agencies for pennies on the dollar.

Most of the debt sold is three to six years old in most states (even shorter in some) and cannot legally be collected. Many consumers are unaware of the statute of limitations for the legal collection of this type of debt. Unlike your current creditors, zombie debt collectors cannot sue you to collect the debt. 

However, there is no law against them trying to collect. Companies that buy uncollectible debts are playing a numbers game. They only need a few people to repay their debts to be profitable. However, many consumers assume are fearful of the collection agency's efforts and end up paying the debt. 

What should you do if someone contacts you about zombie debt?

• Send the collection agency a certified letter within 30 days of contact stating that you are disputing the debt in question. This action forces the collection agency to provide you with proof that the debt indeed belongs to you. They must also provide you with the name and address of the original creditor. This action requires the collection agency to stop all collection activity until this information has been provided.
   
• Never acknowledge that the debt is yours—even if you think it is.
   
• If the debt is yours, but is from years ago, it's likely unenforceable in a court of law after the statute of limitations has passed. Each state has its own statute of limitations.
   
• Do not agree to a reduced payment or to make payment on the debt. This will restart the statute of limitations, which starts the last day of activity on the account. Once you agree to a payment plan the debt becomes valid again and gives the creditor the option to sue you to collect it.
   
• Under the Fair Debt Collection Practices Act (FDPCA), a consumer cannot be sued after the statute of limitations passes, nor can a debt collector insinuate that arrest or imprisonment is possible if you do not pay the debt. They also cannot continue to contact you if you have written a cease and desist letter, nor can they contact your employer, friends, relatives, or neighbors.

If you want to pay off the debt, you're within your rights to do so, but make sure you know who you are paying. The money isn’t going to go to the original lender. It is going to the secondary debt collection agency. 

For example, if you want to pay off a debt to your family doctor to start seeing that doctor again, realize that the doctor’s practice likely sold the debt long ago. In this situation, you might consider contacting the original lender and offering to pay them directly.

Even though zombie debt can plague you, knowing your rights and options can help keep persistent collection agencies from chasing you.

Do you need advice on debt that's come back to haunt you from the grave? 

Schedule a consultation. Team Treece is here to help!

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