Zombie Debt - Bringing Dead Debt to Life

One of the common violations of the Fair Debt Collection Practices Act (FDCPA), enforced by the Federal Trade Commission (FTC) and private attorneys, is collecting a nonexistent debt. Debt Collectors often resort to creating phantom debts or bringing old and paid debts to life in search of easy money.

Creditors, unable to recollect debt from debtors, usually sell debts to third party debt collectors. These third party debt collectors are overzealous, and use any means available to extract money from innocent consumers. These debt collectors buy debts from creditors for a throw-away price, and thus have nothing to lose. However, each individual employee of the debt collection agency receives a commission calculated on the basis of his ability to collect payments on debts.

Debt collectors need prey to feed on. Innocent consumers are the vulnerable victim that they have found for this purpose. Debt collectors bet on consumers’ lack of knowledge of their rights under the FDCPA and state law. They often dig out old debts which have either been completely paid, written off, or which are beyond the applicable Statute of Limitations (meaning that no legal action can be taken to enforce them). These are called zombie debts. They are used by debt collectors to intimidate consumers into paying money they don’t know, or which cannot be collected. Consumers, however, have rights under the FDCPA that protect them from unfair attempts to collect such debts.

If you are being harassed by a debt collector for an old debt of yours which you have repaid completely or which has been forgiven and written off by the original creditor, use your first tool – ask for validation of the debt within 35 days. Ask the debt collectors to send complete validation of the debt along with the name of the original creditor and details of the amount spent. Your request should be made in writing and the letter sent via certified mail with return receipt request. This should stop the debt collectors in their tracks because it is very difficult or impossible for debt collectors to validate a debt that is old or already paid.

Like everything else, debts also have expiration dates. The Statute of Limitations (SOL) is time limit within which a debt collector can use the court system to collect payment. When the statute of limitations, which varies by state and type of debt, has passed, a creditor or debt collector can still attempt to collect, so long as he follows the rules of the FDCPA and state law. But the collector cannot threaten to take legal action, as no legal action is possible.

If you are receiving harassing collection calls about an old, already paid, or expired debt, you can engage an attorney to handle the legal aspects of the case and force the debt collectors to stop. Once you engage an attorney, debt collectors are no longer permitted to contact you. If the calls continue, this is an additional violation of the FDCPA for which you can sue. Your attorney can help you to determine how best to stop the calls and obtain compensation for the FDCPA violations.