Zombie Debt

Even Zombies say, "Zombie debt bad!"

Zombies are more popular now than at any time I can remember. There are new zombie movies coming out, zombie games, zombie parties, and even self-defense products for the upcoming zombie apocalypse.  There is one more Zombie Threat you must protect yourself from, ZOMBIE DEBT!

Zombie Debt is a collection that has been “termed” off your report. In other words, it has reached its seven year expiration and been removed automatically from your credit report. Then collectors try to call and collect on “Dead Debts” or “Zombie Debts.” It is as if the seven plus year old debt has risen from the grave and come back to haunt us. Imagine your old debts doing the slow zombie shuffle to your door yelling, “Pay me, pay me!”

Zombie Debt Collecting is becoming more common. This is particularly true with people who don’t track their finances well and don’t follow their credit report. Bill collectors are taking advantage of their naiveté and making threats about legal actions if payments don’t start right away. These tactics are working in the lower income communities. Typically they are going after old credit card debt.

Consumers need to know their rights in regards to credit reporting. I present a workshop in the community and at my credit union titled, “The Myths of Credit.” The presentation goes over the top ten myths of credit and an emphasis is put on managing and understanding collections. Too many people don’t understand that a collection can only be collectable for seven years and not beyond that. However, these collection agents continue to attempt to collect debts that are well beyond the seven year period. Also, once families go into an agreement with the collector on a Zombie debt, they need to stick to it and make their payments as the collection agent could now make this a new collection for nonpayment due to the payment agreement/promissory note the consumer might sign.

How should a person handle collection calls and avoid Zombie Collections? Regrettably, it is not as simple as shooting a zombie in the head and ending the threat.

Before a collector calls:

1.       Access your credit report through AnnualCreditReport.com. You can access all three bureaus’ reports here. You will never be in the dark about your credit status. You will always know when a collection has gone on to your report and when it expires. This is a free service.

2.       Sign up for CreditKarma.com. They will notify you of any changes in your score and provide the info for those changes; such as a collector “re-aging” a collection or putting an old expired collection back on your report with a new date to make it appear current. This is also  a free service.

When a collector calls:   

1. Don’t admit to anything. Don’t agree to payments. Your agreement to making payments  or even acknowledging the debt could provide the company the legal right to collect the debt and may reinstate a dead debt and make it a real Zombie!
2.   Make them identify themselves and the details of the debt they are collecting; dollar amounts and the date the collection became active on your credit report (AKA First date of delinquency: The legal term for the first day a debt goes on your credit report). This date can clue you into whether they are collecting on a Zombie debt.
3.  Don’t fall for the traps. Agencies will sometimes “re-age” the debt, (reporting the debt to the credit bureau as if it’s new). They might promise to wipe off the “red checkmark” on a credit report, of sometimes do a “bait and switch” where they tack on the balance of a zombie debt to a new credit card offer. 
4.  Ask them to validate the date and amounts of the collection and send them to you in writing. This should also include asking them for the credit card agreement you signed. Double check the statute of limitations in your state. Generally, seven years is the accepted period of collection. If the debt was discharged thru a bankruptcy they cannot collect it.
5.  If you have determined that you are not responsible for the debt due to age of the debt or other written agreements such as settled or paid in full, write a letter to the collection agency and inform them that you will not pay the debt and share the reason for it as well as any copies of evidence you have showing the debt is no longer collectible.
6.  Collectors often like to threaten payees with court. “If you don’t pay this, we will take you to court!” With most modest credit card debts it is just not economically feasible to hire attorneys to go after the payees. This is a common threat with Zombie debt. If your debt is expired and the collector makes this threat, it is an empty threat with nothing to back it up. No one is going to spend big money ($500 per hour!) to hire an attorney and pay for court costs to collect small expired debts.  
7.  Check your credit report annually. Review it and compare it to the previous year’s report and determine that all items on the report are current and valid.

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