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When you leave a legitimate debt unpaid, it can’t simply be written off as dead, even though significant time may have passed. It can come back to haunt you, like a zombie rising from the grave. When that happens, it’s called zombie debt. For many consumers, the news that a zombie debt has arisen arrives by phone with a call from someone trying to collect payment from you. Or it may come through the mail, or via text message.
Even people who have no unpaid debts may get a collection call or letter. “Every old account you’ve ever had can come back to haunt you,” said Steve Rhode, otherwise known as the “Get Out of Debt Guy.” “Just because someone makes a claim (that) you owe an old debt, doesn’t mean you do or that the balance is correct.”
So while debt collection calls can be alarming and unwelcome, you might not be on the hook to pay anything.
Follow these steps if zombie debt is chasing after you:
6 steps to deal with zombie debt
1. Don’t agree to anything
The first tactic for anyone who gets contacted about a debt: Don’t offer any information or agree to anything before you find out all the relevant facts.
“When an old debt resurfaces, it is a request for payment,” Rhode said. “As a smart consumer, you should investigate the matter and gather facts so you can make an educated decision if this is just a ploy to trick you to pay money you don’t owe, or a legitimate claim.”
The reason: Some debt collection scammers attempt to collect debts that aren’t owed, or to gather personal information. So if you are contacted, don’t correct an incorrect phone number or other personal information.
2. Ask for additional information on the debt
The next step is to get all the information and documentation so you can determine if you are responsible for paying the debt.
“To investigate the debt you should first never admit the debt is yours or valid while you investigate. A collector can use that against you. Instead, you should politely ask the collector to prove you owe the debt. This is called debt validation.”
Don’t have any discussions until you get the debt validation. Do this whether or not you think the debt is valid, and get the paper trail started. It also buys you a little time.
Within five days of initial contact with you, the debt collector must provide the following information in a debt validation letter:
- The creditor
- The amount owed
- State that you can dispute the debt and if you don’t dispute it within 30 days, it will be assumed to be valid
- State that if you do dispute, you are entitled to a verification of the debt from the collector
- For debts with a secondary creditor, they must give the name of original creditor if you request it within 30 days
3. Research the debt collector
If you still don’t recognize the debt after getting the letter of validation, research the company that’s trying to collect.
Get the collector’s name, and the name, address and phone number of the company. Any legitimate company will provide this information. Look up all the information on the internet. See if the Consumer Financial Protection Bureau has any record of problems with the collector.
Also reach out to the original creditor and see if the claim is valid and if the collector is authorized to collect this debt. You can also request a copy of your credit report to see if the debt is on it.
4. Check if the debt is within its statute of limitations
If it is a valid, unpaid debt, look up the statute of limitations.
The debt collector can’t sue if your debt is past the statute of limitations, which differs from state to state and by debt type. (The four categories of debt are oral agreements, written contracts, promissory notes, and open ended accounts.) It usually begins when you first miss a payment on a debt.
The lengths vary by state and can be as short as three years for a written contract in six states including Delaware and the Carolinas, or as long as 15 years for written contracts in Ohio.
Whenever that period is over in your state, the debt is considered “time-barred.” Keep in mind that because the statute of limitations has passed doesn’t mean creditors can’t try to collect on time-barred debts, it just means that they can’t sue. If it’s not too old, that negative information may also stay on your credit report, typically for seven years.
So, if it’s time-barred, and you don’t have to pay, should you pay? That’s your decision to make. You may want to close that debt if it’s affecting your credit score (check your credit report).
But be careful about making a payment on an old debt. Depending on location, if you make a payment or even acknowledge your debt in writing, that could reset your statute of limitations. In some states, it’s considered “revived” (in additional zombie-evocative terminology). Then they would be allowed to sue, and possibly also get interest and fees.
If you do get sued for a time-barred debt, don’t ignore it or the judgment could go against you. Show your debt verification, and show your proof of your last payment.
5. Dispute the debt if it isn’t yours
Within 30 days of getting your validation notice, you must respond to the collector, stating specifically why you don’t think you owe this debt (assuming it isn’t yours). Make a copy of the letter and consider sending it via certified mail with a return receipt. The collector must then stop contacting you, unless they can document verification of the debt.
If the debt appears erroneously on your credit report, you should dispute that as well.
6. Repay the debt if it is yours
If you do owe the debt, and it’s within the statute of limitations, work out a repayment plan.
If you can pay the debt, it’s time to pay so you can go forward with a clear record. If not, you may be able to work with the collector and pay it off for a lower amount. Just be sure to get the terms of the agreement in writing stating it releases you from obligation. Keep a record of your payments.
Communicating with debt collectors
If you need to contact a debt collector, you may want to consider using any of one these sample letters provided by the CFPB. These letters may be useful for the following situations:
- Requesting more information about the debt
- Disputing the debt and asking the debt collector to provide proof or end communication
- Outlining when and how often the collector may contact you
- Informing the collector that the consumer has hired a lawyer (after this, the collector must communicate through your attorney)
- Telling the collector to cease all contact (for example, if you have a time-barred debt that you are not legally obligated to pay)
Keep copies of any letters you send, and consider sending them via certified mail with a return receipt to document the collector receiving it.
Know your rights when dealing with debt collectors
The Fair Debt Collection Practices Act (FDCPA) went into effect in 1978 to regulate debt collection and prevent abusive collection tactics. Today, it’s mainly enforced by the CFPB.
Among its practices: Debt collectors must contact you at convenient times, between 8 a.m. and 9 p.m., unless you agree to another arrangement.
The FDCPA forbids many other abusive, deceptive or unfair collection practices as well. When trying to collect a debt, debt collectors can’t harass or use profane language. They can’t threaten arrest.
Debt collectors can’t call you at work if they are told you can’t take calls there. They may contact others (such as neighbors and friends) to locate you, but typically only once. They can, however, discuss the debt with your spouse.
They can’t call over and over intending to annoy you, or communicate or leave a message in a way that might be seen or heard by others than the intended recipient. They cannot publish debtors’ names on a bad debt list.
Essentially, if a debt collector is behaving disrespectfully, aggressively or in a manner or that you suspect is dishonest, take a look at the FDCPA to see if it’s legal. The CFPB also collects complaints about debt collection problems and about specific debt collectors, and will contact the company collecting to determine next steps. Consumers can also see if others have had similar experiences with those companies.
You can also report problems with debt collectors to your state attorney general’s office and to the Federal Trade Commission online or by phone at 1-877-382-4357.
If you believe the debt collector has broken the law, you can sue within one year of the activity. Consumers can sue for any damages they can prove or they may be awarded up to $1,000 plus reimbursement of attorney and court costs, or a class action lawsuit may be awarded up to the lesser amount of $500,000 or 1 percent of the collector’s net worth. If your debt is valid and within the statute of limitations, suing the collector will not erase the responsibility for paying it.
If you get a dread-inducing phone call or letter informing you of collection of an old debt, the manner in which you respond is crucial.
“Contact from a debt collector can be stressful and frightening,” Rhode said. “But keep in mind the initial contact is just a request for payment and may not be based on the accurate or factual information. I’m blown away all the time with the number of people who just assume the collector is correct or who fail to show (up) in court when they are sued over a debt they don’t owe and lose by default.”
But if you are well informed, there’s a much better chance you can turn matters in your favor.
“If you want a successful outcome, you must get involved, take action, participate, and approach it like you are gathering facts and avoid getting hostile or emotional until all the data is in.”