When you’re deeply in debt, it feels as if debt collectors are always at your heels, grabbing at you for money. Bankruptcy finally frees you from this burden and allows you to shed old debt.
But certain debts just refuse to die. They rise from the dead and come back to haunt you again, even after they’ve already dropped off your credit report.
This is called zombie debt. It comes from debt collectors and purchasers who try to twist the rules in their favor convince you to pay.
The FDCPA Doesn’t Always Stop Zombie Debt
The U.S. Fair Debt Collection Practices Act (FDCPA) protects people from creditor harassment and is quite specific about what creditors can and cannot do to recover debts. Among other things, they can’t threaten you, lie to you, misrepresent who they are, or mislead you about the amount of money you owe.
However, debt collectors sometimes try a tactic that’s technically within the rules but feels shady. It is a way of “resetting the clock” on the deadline they have to recover money from old debts.
Each time you incur a debt, a clock starts ticking and the creditor has a limited time to collect on the debt. If they fail to do so and the deadline passes, the creditor cannot sue you to collect the debt. If they cannot sue you, it is next to impossible for them to make you pay it.
The average person doesn’t always realize this. So if an old debt reappears and a debt collector starts calling, you might be tempted to pay it out of fear and frustration.
Don’t Panic. Don’t Pay. Call Your Attorney.
When zombie debt returns, it’s often due to debts being sold – and sometimes re-sold, and re-sold – to companies that buy these debts for pennies on the dollar. They’re playing a financial game, betting that they’ll get you to pay.
They’re gambling on a little-known aspect of the law that says the clock restarts when the debtor makes a payment. All they need is a single payment from you. In fact, they may try to pressure you to make a “good faith” payment of just $1 to prove you’re doing the right thing.
If you do it, you’ve given the debt collector something very valuable. Now they have the right to pester you for years to come, and it’s all within the law.
So if someone is hassling you about a very old debt, contact your bankruptcy attorney before signing anything or making any payments. Ask for their name and contact information, then hang up the phone and call Sawin & Shea.
Zombie Debt is Often an Idle Threat
A zombie debt collector might say they’re going to sue you, place a lien on your property, or garnish your wages. But if it’s an extremely old debt, those things are unlikely to happen.
You should know that most zombie debt doesn’t result in further action against you unless you pay on it. A Washington Post investigation found that debt collectors bring in “tens of billions of dollars” simply by confusing people into paying old bills that have passed the legal deadline for collection.
Remember, it’s expensive for debt collectors to do much more than call and email you. They probably don’t want the hassle or cost of legal action, especially if you have a good lawyer. Zombie debt collectors are betting on your sense of fear and are really just trying to scare you.
Instead of panicking and paying them, use legal knowledge to your advantage. Contact your bankruptcy attorney at Sawin & Shea to discuss a smart strategy for resolving zombie debt once and for all.
Sawin & Shea—Indianapolis Bankruptcy Attorneys
Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process.
Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We are ready to help.