You believe you’ve settled all your debts and are ready to get a
fresh start on life. But then, you get a notice in the mail stating that
you owe money on a specific credit card, a loan that you don’t even
remember having or that you’re sure you paid off. An old or paid
off debt that comes back to life to haunt you is what’s known as
a zombie debt.
Why Are Old Debts Pursued?
When you take out a loan or line of credit, the information is kept with
the lender. If you make payments and clear the balance or fail to make
payments but the institution charged it off, you no longer owe on it,
but your data could be stored in the creditor’s system.
Along comes a debt collection company (also called a debt scavenger), looking
to purchase old debts from lenders. It will usually buy loans for pennies
on the dollar. Typically, when a debt collector gets data from an institution,
it usually doesn’t get more than the basic data kept on file.
Although the debt collection agency has scant information about your debt,
it will try to recover funds from you. In doing so, since it paid so little
for the data, it can make quite a bit of money off your old loan.
How Is a Zombie Debt Revived?
Seeking to get as much as it can from you, a debt collection agency will
employ various tactics to collect on the loan it purchased.
The types of methods a debt collector will us vary, but they can include:
- Demanding that you make a small payment to settle the loan
- Threatening to put the old debt on your credit report
- Filing or threatening to file a lawsuit to recover funds
- Harassing you through constant phone or mail communication
These efforts are carried out as a way to force you to repay the entirety
of your loan so the debt collection agency can make more profit. If you
are coerced into paying even the smallest amount on the old balance, the
statute of limitations – the deadline for which a creditor can file
a lawsuit – resets, and the company can take legal action to recover funds.
Unfortunately, you might not be aware of laws concerning debt collection
practices, and afraid to have a mark on your report or face a lawsuit,
are tricked into reviving your old debt. Doing so could hurt you, as the
debt collection agency is now legally allowed to sue you for the full
amount of the debt.
How Can You Fight a Zombie Debt?
If a debt collection agency contacts you about an old debt, try not to
provide it with any information that could give them ammunition to pursue
your loan. You might receive notice that the company will pursue a lawsuit
to collect. Even if you believe it’s an empty threat, it’s
best to discuss the situation with a
debt defense attorney. They can provide sound legal advice about the steps you can
take and how you can protect yourself from debt scavengers.
Speak with Albaugh Law Firm During a Free Consultation
If you’ve been contacted about an old debt, reach out to our skilled
team today. We are committed to helping you resolve complex financial matters.
We’re ready to answer your questions and discuss your legal options.
Call us at (904) 637-1839 or
contact us online to get started.