What is a zombie debt? All you need to know

If you are one of those who think that having debts reported on your credit report is a terrible fact, you have not yet experienced the damage that a zombie debt. Although it is not so frequent, this possibility seems to be taken from a horror movie and rises from its grave to make your worst nightmares come true.

Sound scary? Well, sit down because it gets worse. Turns out this debt might not even be yours (now you can start screaming).

What is a zombie debt?

We are going to start by defining this type of debt, if it can be called that. A zombie debt is a type of debt that has been “resurrected” by some collectors or agencies, and has now been put on your credit report, whether it is yours or not. Typically, these debts are well beyond the statute of limitations, which is the legal regulation that protects debtors from collectors.

However, zombie debts exist 1) by mistake, 2) by identity theft, or 3) by a fraudulent attempt by a third-party collector trying to collect a debt that is not real. But what do you do if you see what you think is zombie debt on your credit report? Be careful! And it is that, when you pay a debt that is not in your name or, rather, that is not yours even though it appears on your history, you are implicitly telling debt collectors that it belongs to youmaking your case even more difficult to defend.

You are probably thinking at this point that there is no scenario in which you would pay for a debt that is not yours, but know that this dirty tactic of collection agents works extremely well. To illustrate it, suffice it to say that 63% of consumer complaints to the Consumer Financial Protection Bureau are related to debt collectors trying to collect a phantom amount. A frustrating situation, right?

But let’s explain it better. This whole bleak picture becomes a little clearer when you understand the difference between the types of debt zombies you might find out there.

The different types of zombie debt

Starting from the beginning, we could classify zombie debts as follows:

  • overdue debts. If you borrowed money – let’s say, through a personal loan – and you never finished paying it off in full, there is a term in which the debt is due. If this time period is met and you do not pay, then the collectors will have lost their right to sue you. This is called the debt statute of limitations.. So what’s the catch here? First, that the limitation period of the debt varies depending on where you live and the type of debt it is, and the second that, if you make a single payment, the counter will be reset.
  • liquidated debtsthat is, those that have already been buried forever in a bankruptcy process or by any other means.
  • Debts that aren’t even yours. This can only mean one thing, at least most of the time: identity theft. Pay attention to this: you are not obligated -and you never will be- to pay a debt that is not yours.
  • Debts that have fallen on your credit report. After seven years, most unpaid debts and negative notes are automatically removed from your credit report. However, this does not mean that collectors give up. They will keep trying everything to get paid. After all, they have bought that debt for profit and they will not give up that easily.

Note: Debt collectors can get the wrong person, in fact, this happens more often than you think. However, some collectors use this as a scam. Why? Because they continually violate federal law to get your money back, wherever it comes from. Just remember this is a dirty tactic and you must not allow anyone to intimidate you to pay a debt that is not yours.

Now, if that phantom amount that has appeared there is really related to a debt that belongs to you, it’s time to agree on a plan in writing with the collector to have it removed from your report. How can you do this? Simple: you offer to pay the full or partial amount of the debt in exchange for changing your comment.

Advice: If you are not very well financially, you should still pay attention to those zombie debts that are yours and that are still due. Keep in mind that, in addition to affecting your score, they could cause you to pay a higher interest rate on your credit card or even lose the opportunity to access a rewards card, such as flyer miles, rebates or an introductory 0% APR .

So what can you do to pay? Well, find a second job, work in your free time online or sell your creations to neighbors and friends.

What tactics do zombie debt collectors use?

It shouldn’t surprise you that zombie debt collectors be very cunning. And, if you think about it, they only have one mission: to go after people who owe them money. This is what they do every day. Although it cannot be generalized, there are several collectors who are capable of going very far in order to intimidate debtors and achieve their goal.

That’s why it’s important for you to know that some of the tactics used by these collectors are not always legal. To help you identify them easily, we will leave you a small selection with their favorite tricks:

  • To lie. Yes, this is how you read it. Collectors are not afraid to stray a little – and sometimes a lot – from the truth. When it comes to collecting their money, they are capable of lying about anything. His favorite lies include pretending to be someone else, telling you that you will go to jail for not paying your debt, and more.
  • Threatening or engaging in bullying. Zombie debt collectors are experts at threatening people with lawsuits, harassing their friends and family until they pay, publicly shaming them, and even violence, at least in verbal form.
  • get information from you. Don’t tell them everything about yourself, no matter how many times they ask. If someone calls and asks for your social security number, your current address, or the name of your best friend, don’t say anything! If you do owe money, chances are your lender already has this information (well, maybe not your best friend’s name).

This count may sound ruthless to you because out there there are also decent debt collectors who abide by federal law. However, knowing these tricks will help you identify when a collector is crossing the line.

Right at that moment, that is, when your rights are violated, it is imperative that you file a formal complaint with the Consumer Financial Protection Bureauthe Federal Trade Commission or the Attorney General of your state.

How to protect yourself from zombie debt collectors?

The best thing you can do to protect your finances – and your sanity – from zombie debt collectors is the following:

#1 Check your credit report once a year

Checking your credit report often is important, and not just because of zombie debt. Obviously doing this regularly will help you determine if there is any misinformation and file your disputes to keep your score safe, but it will also could allow you to identify if you have been a victim of identity theft. What does this mean? That a stranger is possibly using your name and your social security number to request credits and accumulate debts in your name.

#2 Know exactly how much you owe

Knowing exactly what your individual and total debt amounts are (and who you owe) is your best defense against zombie debt collectors.. In this way, when someone calls you, you will know if he is trying to make you pay for a debt that you have already paid or if – worse still – they are trying to collect a debt that is not yours. Keep all your account statements, contracts and payment receipts at hand to defend yourself against any event like this.

#3 Do not share your personal information

If a legitimate debt collector calls you, they should have all of your information. If it is a zombie debt collector, they will try to get your personal data out of you. Do not share anything with them or they will use it against you.

#4 Find out about your rights

Believe it or not, collectors must follow a series of rules and regulations that have been legally established by the federal government and Congress to avoid inappropriate or abusive behavior. The law that protects you from collectors is the Fair Debt Collection Practices Act. If you think a collector is violating your rights as a consumer, let them know that their attitude or behavior goes against the guidelines and file a complaint with the Consumer Finance Protection Bureau.

What to do if you are contacted about a zombie debt?

If you’re being harassed for a zombie debt, send the agency a certified letter (return receipt requested) stating that the debt isn’t yours and let them know it’s time for them to stop calling you. If they continue, you can file a complaint with the Federal Trade Commission (FTC) or with your state attorney general’s office.

Do you think you are a victim of identity theft?

It’s time to freeze your credit history, close accounts that were fraudulently opened in your name, place a fraud alert and report it to the FTC. It is difficult to predict that someone will steal your identity. So what would be your best defense? Be prepared and protect yourself before it happens. Zander Insurance is one of the few companies that is responsible for protecting users against identity theft. If an issue like this worries you, it may be a good idea to use their services.

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