What is a Zombie Debt?

General Definition: A zombie debt is an older debt (typically greater than 3 years old). A zombie debt can belong to someone else, passed the statute of limitations or even is already paid off.

Out of the blue, you receive a call from a collection agency about a debt you forgot about. Or maybe it’s a debt you never heard of. However, the collection agency told you that if you do not pay the debt they will sue you.

This type of behavior happens sometimes with what the industry calls “zombie” debts. When this happens it is important to know your rights. Consumers receive certain protections by their state’s statute of limitations. There are also separate protections afforded by the Fair Debt Collection Practices Act (FDCPA).

If you are getting contacted about an old debt, this article will help you determine your responsibility. This article will also provide tips for addressing a collection agency that is trying to unlawfully collect on a zombie debt.

Identifying a Zombie Debt

A zombie debt may come in different forms. However, it usually is an older debt that is inactive for at least three years. Sometimes the debt will not even belong to you. In other cases, it may be a debt that you already paid off.

Collection agencies will purchase old debts at a discount with the hope of collecting on them. However, some of these debts are not legally enforceable. Yet, it does not stop a collection agency from trying to deceive you into paying them. They may even add unauthorized interest and charges in an attempt to get you to pay even more.

There are a few factors to consider when a collection agency contacts you about an old or unknown debt. Consider the following:

• Is the debt yours? The first thing you need to determine is whether the debt belongs to you. Often, a collection agency will try to get you to pay off the debt of a family member. This is especially the case if that person passes away. Or the debt information may be the result of identity theft.
• Is the debt for the right amount? Many times, a collection agency will try to trick you by adding recent charges to make it look like a newer debt.
• Did the statute of limitations expire on the debt? Each state has a statute of limitations on debt. If an account has been inactive for a certain amount of time it is no longer legally enforceable. The period varies by state but tends to be shorter for revolving accounts (e.g., credit cards).

Understanding these factors is essential. For instance, in some states if you make any payment on a time-barred debt, the statute of limitation resets.

The FDCPA and Zombie Debts

The FDCPA has protections if a debt collector is trying to coerce you into paying a zombie debt. It is illegal for a collection agency to deceive you into paying a debt that is no longer legally enforceable. For example, it is a violation under the FDCPA for the collection agency to engage in the following:

• Deception. Any misrepresentation regarding a debt or your responsibility is a violation of the FDCPA.
• Threats. It is illegal for a collection agency to threaten you about a debt. They also cannot make false threats of lawsuits to pressure you into making a payment.
• Harassment. If a collection agency continues to contact you about a debt you disputed they violate the FDCPA.

Note: The statute of limitations applies to any party that loans money. However, the FDCPA only applies to third-party debt collectors.

What Are My Rights With Zombie Debts?

If a debt collector is harassing you about a zombie debt, consider the following options:

• Notify the Collection Agency in Writing. If a collection agency continues to contact you, send them notice of the violation in writing. You should also dispute the debt and inform them that failure to stop may result in a lawsuit.
• Submit a Complaint to a Federal Agency. You can submit general consumer complaints to the Consumer Financial Protection Bureau (CFPB). For FDCPA violations you should also send a complaint to the Federal Trade Commission (FTC).
• Take Legal Action. Consider filing a lawsuit if the previous options do not stop the illegal behavior. Also, you may need to file a lawsuit if you suffer any damages.

Conclusion

If you start to receive communication about a zombie debt, take some time to determine your rights. You likely have no responsibility to pay the debt.

In addition, the collection agency may have violated your rights under the FDCPA. If you are unsure, request a consultation with a consumer rights attorney. They can evaluate the debt collection actions and determine if you have a case.