Zombie Debt

What Is Zombie Debt?

Zombie debt is old debt that has been charged off, sold to a debt buyer, and is now being collected again -- sometimes years or decades after you last made a payment. Like zombies, these debts keep coming back even when they should be dead.

How Zombie Debt Works

Original creditors sell charged-off debt to debt buyers for 2-5 cents on the dollar. Debt buyers then attempt to collect the full balance plus fees and interest. The debt may have been sold multiple times, with records becoming less accurate at each transfer. Sometimes zombie debt collectors try to collect debts that were already paid, discharged in bankruptcy, or belong to someone else entirely.

Your Rights Against Zombie Debt Collectors

Request debt validation in writing within 30 days of first contact. Check the statute of limitations -- if expired, the collector cannot sue. Do not acknowledge the debt or make any payment (this can restart the clock in some states). Report FDCPA violations to the CFPB and your state attorney general.

Check your state's statute of limitations. Send a cease and desist letter.

Common Zombie Debt Scams

Threatening to sue on time-barred debt. Adding unauthorized fees and interest. Collecting on debts already discharged in bankruptcy (a federal crime). Collecting from the wrong person. Phantom debt -- debts that never existed at all.

When Bankruptcy Helps

If you are being overwhelmed by zombie debt collectors, bankruptcy provides the nuclear option: a discharge that permanently eliminates the debts and the discharge injunction that makes future collection a federal court violation. The discharge injunction.