How to Kill Zombie Debt

How to Kill Zombie Debt
  • Opening Intro -

    Some debt never seems to die. Or at least no one has "told" that debt that it is long dead.

    From the tales of the undead comes zombie debt, what represents very old and uncollected debt that companies may have given up on collecting.


That does not mean there isn’t a company around somewhere that won’t try to collect on that debt even if the statute of limitations has expired.

About Zombie Debt

Zombie debt can come out of nowhere even years after you thought that the debt had gone away. What typically happens is that a collection agency buys old debt from a creditor for just pennies and will attempt to get you to pay what they say that you owe.

For instance, if you have an overdraft payment for a closed bank account, the bank may push this cost off of its books by selling the debt to a collector. You may owe the bank $75, but the agency may pay just a dollar or two for the debt with the bank writing off the difference. Now, the collection agency will contact you for payment in full.

Tricks of the Trade

The agency has a number of tricks up its sleeve to get you to pay. One trick is to allow you to settle for a smaller amount, making it look as if you’re getting a bargain. You may end up paying $25 instead of $75, giving you the impression that you saved $50. At the same time, the agency may make $22 or more based on the amount you sent in.

Here’s what you may not know about aged debt: it may no longer be collectable. Every state sets a statute of limitations for collecting debt and if that debt falls outside of that limit, then you do not owe a cent. Old debt may have also been discharged if you filed for bankruptcy, so you may have to convince the debt collector that the debt is no longer valid.

Certified Mail Response

If you are contacted by a debt collector, you don’t need to engage in conversation with this individual. What you should do is obtain this person’s mailing address, then end the call. Then write a letter and send it by certified mail with return receipt disputing the debt within 30 days. The collector must supply a copy of the judgment against you or gain verification of that debt. No further debt collection activity is allowed until you receive notification. This will allow you to find out if the debt collection effort is legitimate, if it has expired or if it belongs to somebody else.

Be careful if you agree to pay part of the debt in exchange for getting the bill collector off of your back. It is a tactic collectors use to reset the statue of limitations, making it possible for them to come after you for the balance. Never pay money that you don’t owe and if the statue of limitations has passed, you don’t have to pay either.

Debt Scavengers

As ghoulish that the name “zombie debt” implies, the people that attempt to extract money from you are typically known as debt scavengers. They represent the bottom of the credit collecting barrel, doing things that reputable credit collection agencies avoid. You should also know that you are protected by certain debt collector tactics through the Fair Debt Collection Practices Act, legislation that protects consumers.

So, if zombie debt rears its ugly self, be prepared to insert a stake through its heart. The undead have a killer bite, so be mindful of the protection that consumer law gives you when fighting off an apocalyptic attack.

See AlsoSettling With Debt


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Categories: Consumer Tips

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".