Brains. Braaaaains.
Sorry, I’m just channeling my inner zombie. If you’re in the mood to cut something off your head, forget about the fictional walkers and consider tackling zombie debt.
Zombie Debt is a lot less fun than it looks, but potentially scarier than the living dead. It’s the debt – maybe a medical bill or a store credit card you never paid off – that is so old that you can’t be sued for paying it. But the debt collectors buy out the debt and then try to cheat or convince you to make a payment, which starts the debt clock again, allowing them to start hunting you again.
In the United States, about 30% – or 68 million people – had debts in collection on their credit report in 2019, according to a study by the Urban Institute. Even at pennies on the dollar, that’s a lot of potential money for zombie debt collectors – aka debt scavengers – to scare away unsuspecting victims.
Pro tip: The CARES law does not protect you from private debt collectors. However, if there is no judgment against you, a debt collector cannot withdraw money from your account.
And it’s not just that the zombie debt is annoying. Negative items, like unpaid debts, should be removed from your credit report after seven years, according to the Fair Credit Reporting Act. If your debt is resurrected, it could be reported to the credit bureaus again and ruin your credit score.
So use your old noggin to stop debt collectors with these zombie debt strategies – no machete required.
How the zombie debt was born
Debt starts life when you don’t pay your bill – it doesn’t matter if it’s because you can’t or don’t want to.
Once a debt is 180 days past due, it goes into collection, which means the original creditor can sell your debt to a collection agency to collect at least part of the bill payment. The agency will in turn contact you (often multiple times) to collect as many debts as possible.
But debt is rarely sold once, paid off, and buried. One collection agency may sell your debt to another, and then the next agency will sell it. It can take some time.
Zombie debt isn’t necessarily old debt – it could be a bill you’ve already paid, that was written off in bankruptcy, or that was misidentified and belongs to someone from other.
Depending on your condition and type of debt, after three to six years without any payment or activity, a debt is considered to be over the statute of limitations, meaning you cannot be sued for it. But collectors can pay bargain prices for a debt they know is old in the hopes of getting even a small portion of the money back.
Even if the debt has passed the statute of limitations, collectors can still contact you, and if the collection agency can make you make a small payment, they can restart your debt timer.
And that’s how the zombie debt was born.
How to fend off zombie debt collectors in 3 steps
If a collection agency starts calling you about an invoice you don’t recognize, it’s important to develop a clear plan of attack to avoid paying money you don’t owe. Don’t be a victim: here’s how to fight back.
1. Require a debt validation letter
As unpleasant as it can be, answering the call of a debt collector is the first step in getting rid of zombie debt.
Yes, it can be overwhelming and scary, but this is your chance to take control of the situation. Rather than letting him harass and intimidate you, demand that the collection agency send you a debt validation letter.
Pro tip: If you still have to pay off the debt and want to pay it off, ask for a secure website where you can make your payment and keep the receipt as proof, just in case the debt gets zombified later.
A debt validation letter is a legal document described in the Fair Debt Collection Practices Act (FDCPA), a federal law of 1977 that provides consumers with legal protection against abusive debt collection practices. Third party debt collectors are required by law to send the letter to you upon request. They should include how much you owe, to whom you owe, and what options you have for taking action.
Read the letter carefully for errors. By having the information in writing, you can begin your attack.
2. Send a debt verification letter
They seem similar, but here is the difference between debt validation and debt verification letters: A debt collector sends a validation letter stating what you owe, while you send a verification letter stating why you don’t. don’t.
In accordance with the law, you have 30 days after receiving a letter of validation of a debt from a collector to respond.
The key here is to specifically address what was in the debt validation letter – now is not the time for over-sharing financial information or trying to explain your situation. If you’re not sure where to start, we have a Debt Verification Letter Template you can add to your zombie fighting arsenal.
After you send the letter, the collection agency must cease collection activities until they send you a debt information verification or a copy of a court judgment. You will then have the option of taking the case to court or setting up a payment agreement.
If you don’t get an answer, chances are the debt collector is a con artist.
But keep all of your records in case another agency takes over the zombie debt and tries to sue you again.
3. Counterattack: Know your rights
If you’ve done your due diligence to prove you’re not responsible for a debt, but the collection agency continues to stalk you, it’s time to step up the battle with the living dead.
Here’s what to do and who to contact if you experience unfair debt collection practices:
File a complaint with the US Consumer Financial Protection Bureau.
File a complaint with your national consumer protection agency through the state attorney general.
Register a complaint with the Better Business Bureau.
File a civil action – you can find an attorney in the National Association of Consumer Advocates directory.
If you still owe the debt and can’t pay the amount owed, contact the collection agency to inquire about a repayment plan. By dealing directly with the debt collector, you could negotiate a lower amount since the agency has not paid the full amount of your debt anyway.
If the collection agency is unwilling to deal or makes an offer that is still beyond your means, consider contacting a credit counselor – check with the Financial Counseling Organization of America or the National Foundation for Credit Counseling ( NFCC) for their directories of member organizations.
With a little diligence, hard work, and meticulous record keeping, you can bury this debt once and for all.
This was originally posted on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through practical and inspiring advice, as well as to resources on how to earn, save and manage money.
