Can Old Debts Come Back To Haunt You? What To Know About ‘Zombie Debt’
Written by
Chris Adam
Edited by
Daria Uhlig
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If you’ve never heard of zombie debt, you might want to listen up. Just like zombies in the movies, these types of debts can be scary. Understanding what zombie debt is and how to deal with it could help you keep past credit problems from rearing their ugly heads when you least expect it.
Zombie Debt Defined
As Dave Ramsey defines it, zombie debt, also called phantom debt, is debt that has come back to haunt you.
“This could be either debt you’ve already paid off, debt that’s too old to be collected or debt that belongs to someone else entirely,” the Ramsey blog explains.
Unscrupulous investors and debt collectors termed “debt scavengers” purchase the debt at a steep discount and then use scare tactics and deception to try to collect from individuals who have no legal obligation to pay it, according to Nolo.
Why Shouldn’t You Pay?
The most important thing to know about zombie debt is that the statute of limitations on debt collection protects you by making the debt unenforceable after a certain period of time. But if you make a payment on it, you reset the clock. That’s right — You give those collectors permission to collect.
“Over recent years, the incidence of debt scavenging has risen dramatically,” according to Nolo. But you do have options to deal with it.
What Can You Do?
According to Experian, taking the following steps with bill collectors can help protect you from falling prey to zombie debt.
- Check your credit report.
- Become familiar with the statute of limitations on debt.
- Verify your rights.
- If necessary, send a cease and desist letter by certified mail.
In any case, your best protection against zombie debt is getting your finances in order. You can work to clear up your debts and pay them off before they are sent to collectors. That way, you can help prevent those debts from returning later as zombies.
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