11/04/2015
- Trial Court Law Libraries
TheFederal Trade Commissiondescribed zombie debt as “a debt that you think is dead, gone, and forgotten, but has somehow comeback to life”. The debt is obtained by collectors who purchase old debt from the original creditors and/or debt collectionagencies for a minimal expense with the intent to secure the monies owed, even if it is only a portion of the original debt. (Note: above link to FTC page is an archived version. Updated information can be found at the following Nolo pageDebt Scavengers and Zombie Debt)
Generally, there is a six year statute of limitations for filing a lawsuit to collect upon a debt, and a seven year statute forreporting bad credit, but there is no statute of limitations on billing for bad debts.
Example of zombie debts include:
- Debt that isn’t your debt, i.e., identity theft
- Debt that is no longer on your credit report
- Discharged debt due to bankruptcy
- Debt past the statute of limitations
You can protect yourself from zombie collectors by:
- Requesting documentation
- Refusing to speak to anyone who calls
- Don’t admit that you own the debt
- Don’t remit payment until you identify the debt as yours
- Be aware of the Statute of Limitations
TheFair Debt Collection Practices Act, is the primary federal law governing consumers’ rights in debt collection andspells out rights and responsibilities when collecting debts. Massachusetts General Law c. 93§ 49 isclear that debt collectors shall not collect or attempt to collect such debt in an unfair, deceptive or unreasonable manner. More on debt collection can be found atMassachusetts Law about Debt Collection.
There are 15 Trial Court Law Libraries located across Massachusetts to serve the courts, attorneys and the public. We are here to help you with your legal information needs.
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As an expert in consumer protection and legal matters, I can confidently provide insights into the concepts discussed in the Massachusetts Law Updates blog post dated 11/04/2015, specifically focusing on zombie debt and related laws.
The article introduces the term "zombie debt," as defined by the Federal Trade Commission (FTC), describing it as a debt that was thought to be "dead, gone, and forgotten" but has resurfaced. This type of debt is acquired by collectors who purchase old debts from original creditors or debt collection agencies at a minimal expense, intending to collect the owed amount, even if it is only a portion of the original debt.
Key Concepts:
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Zombie Debt: This refers to old debts that resurface, typically purchased by collectors, with the aim of collecting money owed, even after the debt was thought to be no longer relevant.
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Statute of Limitations: The article mentions a six-year statute of limitations for filing a lawsuit to collect a debt and a seven-year statute for reporting bad credit. However, it notes that there is no statute of limitations on billing for bad debts.
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Examples of Zombie Debts:
- Debt not belonging to the individual (identity theft)
- Debt no longer appearing on the credit report
- Debt discharged due to bankruptcy
- Debt past the statute of limitations
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Protecting Yourself from Zombie Collectors:
- Requesting documentation
- Refusing to speak to anyone who calls
- Not admitting ownership of the debt
- Not making payment until confirming the debt's legitimacy
- Being aware of the Statute of Limitations
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Relevant Laws:
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The Fair Debt Collection Practices Act (FDCPA): A federal law governing consumers' rights in debt collection, outlining rights and responsibilities when collecting debts.
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Massachusetts General Law c. 93§ 49: This law specifies that debt collectors in Massachusetts must not collect or attempt to collect debts in an unfair, deceptive, or unreasonable manner.
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Trial Court Law Libraries in Massachusetts: The article mentions the presence of 15 Trial Court Law Libraries across Massachusetts, which serve the courts, attorneys, and the public, providing assistance with legal information needs.
This comprehensive overview emphasizes the importance of understanding and protecting one's rights in debt collection matters, particularly when dealing with the resurgence of zombie debt. It also highlights the relevant legal frameworks, including federal laws like the FDCPA and state-specific laws like Massachusetts General Law c. 93§ 49.
FAQs
How Zombie Debt Works. Zombie debt generally refers to debt that is more than three years old, which has either been forgotten about, already paid off, or belonged to someone else. It can also be the result of identity theft, a computer error, or a fraudulent attempt to collect on a debt that does not exist.
How do you respond to zombie debt? ›
Don't make any payments or offer zombie debt collectors any information. Use CFPB sample letters to respond to zombie debt collectors. The bureau includes instructions with the letters, which should help you assess the situation and plan your next move. Be sure to send it as a certified letter.
Can I ignore zombie debt? ›
While you don't want to ignore a debt in any type of capacity, you still have rights when it comes to protecting yourself against creditors who are contacting you after the statute of limitations has closed. Making even a small payment on an old debt could also cause the statute of limitations to reset.
What is the zombie debt statute of limitations? ›
This situation commonly involves various debts, such as outstanding credit card balances or unpaid medical bills. Under California's Code of Civil Procedure § 337, the statute of limitations for these debts is four years, starting from the date of the first missed payment.
What are three types of zombie debt? ›
The most common types of zombie debt include discharged or settled debts, time-barred debt, debt that has fallen off your credit reports and debt that doesn't belong to you.
How to buy debt for pennies on the dollar? ›
A debt buyer purchases delinquent debt from the original creditor and then attempts to collect it from the person who owes it. Because the original creditor may have given up on ever getting the money it is owed, it may be willing to sell the debt for pennies on the dollar.
How do I dispute a debt over 10 years old? ›
Send letters to the credit bureaus
If the debt really is too old to be reported, it's time to write to the credit bureau(s) to request its removal. When you dispute an old debt, the bureau will open an investigation and ask the creditor reporting it to verify the debt. If it can't, the debt has to come off your report.
What is the meaning of zombie loan? ›
“Zombie” mortgages are mortgage debts that consumers thought were forgiven or satisfied long ago but that still exist. The debts may have been written off by the lender and sold for pennies on the dollar to debt collectors.
Can I just never pay my debt? ›
“Technically, you can stop paying your credit card bills, but it isn't advisable,” said Tayne. “It will make it difficult for you to borrow money for years to come. Plus, you'll get hounded by your creditors and collection agencies and could even get sued.”
Can zombie debt be collected? ›
Zombie debt is resurrected debt that you likely no longer owe but that a debt collector will try to get you to pay anyway. It can pop up when you least expect it, but you can take action to fight it.
If you don't pay the debt, the lender has a few options: The lender can try to collect the money from you themselves. The lender can hire a debt collection agency to help them get the money. The lender can write off the debt and sell it to a debt collection agency.
Can a 10 year old debt still be collected? ›
Can a Debt Collector Collect After 10 Years? In most cases, the statute of limitations for a debt will have passed after 10 years. This means a debt collector may still attempt to pursue it (and you technically do still owe it), but they can't typically take legal action against you.
Can I be chased for debt after 10 years in USA? ›
The law does not eliminate the debt, it merely limits the time frame that a creditor or collection agency has to take legal action to collect it. The time frame varies from state-to-state but is generally 3-6 years.
At what point does a debt become uncollectible? ›
Typically, after 10 years of not paying debt, the statute of limitations will have passed. This means that while you technically still owe the debt, debt collectors may try to collect it, but they typically cannot pursue legal action against you.
What types of debt can be discharged upon death? ›
Some debts may be forgiven upon death, depending on the circ*mstances. Student loans are commonly forgiven upon a borrower's passing. Most kinds of consumer debt, including auto loans, credit cards, and personal loans, are leveraged against the estate, up to the full value of the estate.
How much is considered crippling debt? ›
If it's between 36% to 42%, look into DIY methods like debt snowball or debt avalanche. If it's between 43% to 50%, take action to reduce your debt load; consulting a nonprofit credit counseling agency may be helpful. If it's 50% or more, your debt load is high risk; consider getting advice from a bankruptcy attorney.
How much debt is considered bad debt? ›
"Bad debt" can be any debt you're unable to repay.
What makes a debt uncollectible? ›
Accounts uncollectible are receivables, loans, or other debts that have virtually no chance of being paid. An account may become uncollectible for many reasons, including the debtor's bankruptcy, an inability to find the debtor, fraud on the part of the debtor, or lack of proper documentation to prove that debt exists.
