Zombie Debt

Posted by Ryan Howard

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Zombies may have a frightening connotation but for many American consumers, zombie debt is downright terrifying. Haunting individuals who are doing their best to pay their bills on time and rebuild their credit score, zombie debt eats at the brains of those who want to put to rest long overdue debts that they thought were resolved.

What is "zombie debt" and Is It a legitimate collections practice?

Undead: A Definition of Zombie Debt

Zombie debt, much like zombies, are tough to stop. In basic terms, this type of debt is an old account that has "come back to haunt" the debtor when third-party debt buyer purchase the debt from another debt collector. Zombie debt may have been previously settled or paid, or may have expired due to a statute of limitations, depending on the state.

The "last date of activity" on the account determines the expiration but can be restarted if the consumer makes any size of payment, promises payment, acknowledges the account, or any other activity on the account. Once the statute of limitations is past, collectors can still attempt to sue a debtor and the consumer has the burden of proof that the debt is expired. The debt can still show up on a credit report because credit reporting time limits are seven years.


Consumer Defense against Zombie Debt

Consumers do have tools to wage war against the forced collection of zombie debt. Federal laws, such as the Fair Debt Collection Practices Act (FDCPA)protects consumers from abusive or unfair debt collection practices. Some tips for fighting back include:

  • The FDCPA dictates that collectors must validate the debt within 30 days of contact. Validation includes documentation from the original creditor, how much is owed, and the agency's permission to collect the debt.
  • Obtain a current credit report to see if the debt is there. FDCPA states that debtors can dispute the debt if it is inaccurate.
  • Contact the original creditor for proof that the original debt was paid or settled.
  • If a debtor does pay off or settle a debt, the settlement should be in writing in case the debt is sold again.


Does BYL Collections Handle Zombie Debt?

BYL Collections doesn't buy debt from other third-party collection agencies. As a primary collections agency, the accounts that are collected by BYL are assigned by the original creditor. If we can't collect on it, we close file and give it back to the original creditor. 

Our mission is to successfully collect for our clients as well as comply with FDCPA rules as a fair but firm collections agency. The Federal Trade Commission oversees debt collections agencies, their tactics for collecting, as well as their behavior towards consumers. We believe consumers work hard to fulfill their obligations and we work with them to help. With solid recovery rates, we help guide tenants, patients, and customers to be better for our clients.


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Topics: Debt Collection, FDCPA