Zombie debt is old debt that in many cases has been paid, written off, settled or discharged in bankruptcy that is nevertheless being pursued by collectors. Companies sell these old debts to third-party collectors who can then hound you for debt you thought had been discharged long ago.
Where Does it Come From?
Third-party collection agencies can purchase delinquent debt from companies such as credit card companies, gyms and hospitals for pennies on the dollar, depending on the type of debt it is. The older the debt is, the cheaper it is to acquire, and the easier it is for collection companies to turn a profit. So-called zombie debt is so old that in many cases the statute of limitations has passed for you to be required to pay it, and in many cases collectors have lost track of the original debtor. Instead, they end up going after someone who never borrowed the money in the first place.
Legal Issues
The Federal Trade Commission has sued several companies over illegally pursuing old debts. In 2005, for example, the FTC won a $2.5 million judgment against National Check Control for threatening consumers with jail and lawsuits for debts that in many cases they never owed, according to MSN Money. Even if you did borrow the money in the first place, in many cases your biggest weapon against zombie debt will be the statute of limitations in your state, basically the time limit set by the courts for how long someone can sue you for unpaid debt.
How to React to Zombie Collectors
Paying a zombie debt may make your situation worse: in fact, it could make you a target for future collections or other companies. Instead, check the statute of limitations in your state and, if applicable, in the state where the alleged debt was incurred. If the statute of limitations has expired, or if you have proof that you have legally resolved the debt, you are within your rights to simply hang up on pesky collection agencies. If ignoring them doesn't work, however, you might have to send a cease-and-desist letter. This letter should use the words "cease and desist" and refer to the Fair Debt Collection Practices Act, or FDCPA, the federal legislation that prohibits collectors from using unfair, abusive or deceptive actions to get your money.
What Next
If a collection agency sends you a legal notice that it is suing you over debt that isn't yours or if it continues contacting you after you have sent it a cease and desist order, you may have to consult an attorney. Make sure to document any attempt the company makes to contact you and file an official complaint with the FTC. If the debt collector sends you written notice of the debt you owe, such as a copy of your bill, and it falls within the statute of limitations, it can legally begin to contact you again.
0 comments:
Post a Comment