What Is Zombie Debt?

An old debt that is no longer legally enforceable, but suddenly has a new collection agency activity, is called a zombie debt.

While it can be overwhelming to deal with these recently rekindled debts, understanding your rights will help you decide how to deal with the debts that have come back to haunt you. Let's go over how zombie debt works and what to do when debt collectors try to chase you.

Definition and examples of zombie debt

A zombie debt is an old debt that should be “dead” but has recently had new collection activities. For example, zombie debt can be reactivated with a new notice from a collection agency or a new debt collection on your credit report.

Often times, the debt is "dead" because it has expired or is no longer legally enforceable, which means that the statute of limitations has expired. The statute of limitations defines how long debt collectors can sue you and use the courts to force you to pay a debt. This time period generally begins on the last date of activity on an account, which is usually the last time you made a payment. The statute of limitations for most debts is three to six years, depending on your status and type of debt.

However, zombie debt can also include:

• Debts that you have already paid or canceled, so you no longer owe a balance.
• Debts that have been settled in bankruptcy proceedings and should not be collected.
• Debts that exceeded the credit report time limit and fell on your credit report.
• Debts that do not belong to you for identity theft or identity theft.

How does zombie debt work?

Zombie debt can be reactivated when a new debt buyer purchases the account. They can also resurrect if the collection agency notices activity on your credit report that indicates that you may be motivated to pay, such as applying for a new credit card or a mortgage.

Certain actions can reinstate the statute of limitations, giving collectors more time to process it, including making a payment or a debt settlement agreement. Check your state law for specific rules about when the statute of limitations begins and what actions reset the watch.

The statute of limitations is different from the credit report time limit, which defines how long negative information can be included on your credit report (usually seven years).

You will know that a zombie debt has been resurrected when you suddenly start receiving calls or letters about a previous debt, or when a previous debt shows up on your credit report. Instead of paying off a zombie debt, you must first verify that it is valid, belongs to you, and is within the statute of limitations.

You are authorized to send a written request for evidence to the collection agency and they cannot charge you until they provide evidence.

Do I need to pay off a zombie debt?

Zombie debts that show up on your credit report can affect your ability to get approved for credit cards, loans, and other credit-related services. If you are trying to qualify for a home or car loan, you may feel compelled to pay off debt to improve your credit score. Unfortunately, paying off a zombie debt can give you more life.

Remember that making a payment, no matter how small, restores the statute of limitations, giving the collection agency more time to process it. If you are not prepared to pay the balance in full, avoid making debt payments.

In some states, even making a promise to pay the balance will reinstate the statute of limitations.

Collectors can try to collect the debt from the zombies, but you don't have to pay it off, especially if the debt doesn't belong to you. Before making a decision about paying off a zombie debt, ask for written proof of the debt.

Sometimes collection agencies do not have the legal documentation showing that you owe the amount they charge you. Once the collection agency receives your request, they are required to show proof or stop charging the account, which means that you can no longer include the account on your credit report.

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