How to Handle Zombie Debts? 

Introduction to zombie debts

Let’s say an individual acquires a debt, and he is unable to pay for a long time due to various reasons; this debt may already be uncollectable. If a debt already exceeded the statute of limitation, the creditor may have already given up on collecting, especially if one becomes hard to reach or uncontactable.

A zombie is a dead body but is somehow back to life. We can compare zombie debts to this, where the main idea and concept originated.

Statute of limitation

The statute of limitation is a law that states the maximum time debt collectors can claim or sue people with unpaid debts. This law varies from place to place. 

Zombie debt collectors

Recently, there are new groups who purchase these debts that are long forgotten or uncollectable from creditors. After that, they will try to profit by hunting down these debtors and aggressively force them to pay.

For example, a debt collector company pays $3 for a debt that has exceeded its statute of limitation. This debt’s original price is $100, so the company collects the same price of $100 from the debtor. The payment of the loan’s face value is usually very minimal, mostly at 3%. The debtor is not required to pay in legal terms as it is already uncollectable, but these companies can be aggressively overboard.

Most debt collectors will surely pursue if the owed amount exceeds $5000, and some will seek even less. If they sue you for this, you should go to court and explain that this is already an old debt that exceeded the limitation statute. Giving a no show will make the court judge you for the amount that you owe. And more importantly, debt collectors might go to certain extents to find where you work or even where you bank.

Important points to know if a zombie debt collector contacts you

It is essential to know how to protect yourself from debt collectors, especially if they have already passed the statute of limitations. Still, the most important is not acknowledging it is yours. Ask them to prove it otherwise if they are pushy. 

There are important reasons why you should never claim an old debt. One is, the debtor and you probably only share the same name. This debt might not even be yours in the first place. Second, if claimed, there can be a possibility of reset in the statute of limitation. If the debt became fresh once again, you would make it legal for debt collectors to sue you. Finally, debt collection scam is real, and they exist. It is important not to hand in any information, especially over the phone, not until they give you a written notice that contains the original debt owner’s name, including the owed amount. The Federal Trade Commission suggests this done in three days. 

Another option is to send the debt collection company a cease communication letter to stop the calls and harassment. From this moment, only confirmations that they’ve already received the said letter or a piece of information on their next legal action against you are the only reasons they should be able to contact you.

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