Happy Halloween! Watch out for “Zombie” debt collectors! File bankruptcy.
October 23, 2010 Leave a comment
Zombie debt is debt which you once owed but now it is actually beyond the statute of limitations for collection. It dies a natural death after the statute runs. It is therefore uncollectable legally but it is brought back from the dead like a zombie by debt collectors who buy it up for pennies and then try to collect it from you. It can be a real problem for people as these zombie debt collectors attack unsuspecting people just like in a zombie movie.
What is worse is that the creditors can report the zombie debt to your credit bureau which can lower your credit score. Some people will pay the debt just to save their credit from ruination. If you happen to convince one of these collectors that you don’t owe the debt then they can just sell it to someone else who will try to collect it from you.
The problem is how can you prove that it is zombie debt? The debt collectors will just tell you to pay it even though it is beyond the statute of limitations.
It is true that you can usually win a lawsuit over zombie debt because the creditor will have a hard time proving that the debt is live and even that it is yours and that they own it. But most people don’t respond to these lawsuits and the creditors get default judgments and they go right to collection with them. That leaves you with a creditor with a judgment against you who can seize assets and garnish wages.
The good news is that bankruptcy solves the problem of zombie debt altogether. You don’t need to argue about it or fight about it in court. Bankruptcy will cause the zombie debt to be discharged regardless of whether you owe it or not. You can even list the debt in your bankruptcy as “disputed” which means that you do not admit that you owe it.
Once you get your bankruptcy discharge then zombie debt is gone. If the collectors try to collect it after a discharge then they are in violation of federal law. Bankruptcy is how we have learned to shoot the zombies in the head so they do finally stay down.
Check out my website at www.farquharlaw.com.
I am a bankruptcy lawyer practicing bankruptcy law in San Diego.