A zombie debt is one that is relatively old and may have been sold to third-party debt collectors. As the new owner of the debt can profit from even partial collection of a balance owed, it may contact the debtor in an effort to do so. In some cases, this debt may have been discharged in bankruptcy or already settled by the debtor.
Zombie debts may also be past the statute of limitations for suing a debtor. However, if an individual makes a payment on that debt, the statue of limitations restarts. Individuals who are contacted about a supposed debt may be wise to verify that it is legitimate. It is possible that a creditor is contacting a debtor about a debt that he or she owes and simply forgot about.
However, debts are sold and resold so many times that it can be difficult to determine if the information a debt collector has is accurate. In 2015, there were 85,000 complaints made to the Consumer Financial Protection Bureau by consumers being contacted about debts that they didn’t owe. Consumers are advised to ask for a validation letter or to contact the debt collector within 30 days of first contact to challenge the debt.
Those who are struggling with debt may wish to file for bankruptcy under Chapter 13. This may put an end to collection efforts such as phone calls or letters. It may also allow a debtor time to reorganize some or all debts. An attorney can explain other benefits of such a decision such as the ability to keep property.