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Definition: Zombie Debt
Zombie debt is an old, defaulted or unowned debt that is haunting the debtor. It refers to a debt that is more than three years old and the person might have forgotten that he owed the debt or it might be belonging to someone else with the same name or a deceased parent. It may be the case that the debt was previously discharged via bankruptcy or by a dismissed court case or it is older than the state’s statute of limitations and is not legally collectible.
The reason for zombie debt is that the debt collector would have bought the debt from the company, to which the person initially owed it to, for a lesser amount. So the profit margin in such debt collections is extremely high. The debt collector tries to pursue the person who owes the debt by using intimidating, abusive or illegal tactics, making phone calls to him or to his place of employment, threatening of intimidating consequences etc. in order to collect the debt. A lot of unscrupulous collection agencies have emerged since the 1990s which try to profit by misinforming the debtors and creating a sense of fear in them.
Some of the ways in which debtors can avoid paying zombie debt are
• Never acknowledge the debt- Debtors can ask for proof such as date of first default and if it is older than 3-10 years, depending upon the statutory limitations, the collectors have no legal recourse against the debtors. Also debt older than the statutory limitations cannot be reported on a person’s credit report.
• Fair Debt Collection Practices Act (FDCPA) allows debtors to send a certified letter to the collector stating that they no more owe the debt, stating the reasons, and collectors cannot call or harass the debtors after that