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What Is a Zombie Debt & How Is It Revived?

You believe you’ve settled all your debts and are ready to get a fresh start on life. But then, you get a notice in the mail stating that you owe money on a specific credit card, a loan that you don’t even remember having or that you’re sure you paid off. An old or paid off debt that comes back to life to haunt you is what’s known as a zombie debt.

Why Are Old Debts Pursued?

When you take out a loan or line of credit, the information is kept with the lender. If you make payments and clear the balance or fail to make payments but the institution charged it off, you no longer owe on it, but your data could be stored in the creditor’s system.

Along comes a debt collection company (also called a debt scavenger), looking to purchase old debts from lenders. It will usually buy loans for pennies on the dollar. Typically, when a debt collector gets data from an institution, it usually doesn’t get more than the basic data kept on file.

Although the debt collection agency has scant information about your debt, it will try to recover funds from you. In doing so, since it paid so little for the data, it can make quite a bit of money off your old loan.

How Is a Zombie Debt Revived?

Seeking to get as much as it can from you, a debt collection agency will employ various tactics to collect on the loan it purchased.

The types of methods a debt collector will us vary, but they can include:

Demanding that you make a small payment to settle the loan
Threatening to put the old debt on your credit report
Filing or threatening to file a lawsuit to recover funds
Harassing you through constant phone or mail communication

These efforts are carried out as a way to force you to repay the entirety of your loan so the debt collection agency can make more profit. If you are coerced into paying even the smallest amount on the old balance, the statute of limitations – the deadline for which a creditor can file a lawsuit – resets, and the company can take legal action to recover funds.

Unfortunately, you might not be aware of laws concerning debt collection practices, and afraid to have a mark on your report or face a lawsuit, are tricked into reviving your old debt. Doing so could hurt you, as the debt collection agency is now legally allowed to sue you for the full amount of the debt.

How Can You Fight a Zombie Debt?

If a debt collection agency contacts you about an old debt, try not to provide it with any information that could give them ammunition to pursue your loan. You might receive notice that the company will pursue a lawsuit to collect. Even if you believe it’s an empty threat, it’s best to discuss the situation with a debt defense attorney. They can provide sound legal advice about the steps you can take and how you can protect yourself from debt scavengers.