If you, like so many Americans, have more debts than you can keep track of, it’s easy for a “zombie” debt to sneak in there unnoticed. What’s a zombie debt?
The term refers to debts a person may be contacted about that they aren’t required to pay for any number of reasons. For example, you may receive a collection notice on a debt you already negotiated with the creditor and paid off. A debt may have passed the statute of limitations and be too old for a creditor or collector to require payment.
It can even refer to a debt that doesn’t belong to you. You may have been the victim of identity theft, or the debt may belong to someone with a similar name, for example.
Ask for information if you don’t recognize a debt
Don’t assume that if a collector is calling you about it, you must owe the money. They could have pulled it from some old records – not realizing, or maybe not caring, that it’s no longer owed. Sometimes debts that were discharged in a previous bankruptcy come back as zombie debts.
Generally, these debts don’t appear on your credit report. However, if you pay a zombie debt when you don’t have to just to get the collector off your back, that’s money you could have spent paying down debts that you do owe. Further, making a payment on a zombie debt can bring it back to life. A National Consumer Law Center attorney says, “Even if you’re feeling pressure during a phone call, don’t agree to make even a $20 payment.”
If you’re contacted about a debt you don’t recognize, you have a right to get more information on it before you make any payment. A creditor or collector is required to provide a debt validation letter. This will help you challenge the debt if you don’t owe it.
If you’re considering filing for bankruptcy because you have overwhelming – and very real – debt, it’s crucial to determine precisely what you’re dealing with and how best to get out from under it and start fresh. Getting sound legal guidance is a good first step.