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Why Paying on Zombie Debt Can Be Dangerous

If you’re being besieged by calls from collection agents, you’re probably already familiar with the term “zombie debt.” For those who don’t know, zombie debt a form of bad debt that is so old, the person may have forgotten that it’s even owed. In fact, chances are good that it actually isn’t owed, perhaps because it’s the result of identity theft, has already been cleared because of bankruptcy or the statute of limitations for suing for payment has expired.

Who Profits From Zombie Debt

You may not know it but creditors routinely sell old debt to third-party collectors for mere pennies on the dollar. The new owners of the debt can make a profit by collecting merely a fraction of the full debt. This opportunity to turn a quick profit has, of course, created a huge industry filled with aggressive phone agents who will try their best to intimidate the person.

What To Do If You Don’t Actually Owe The Debt

As stated above, zombie debt can arise from a host of sources. If you’re unsure about whether or not you actually owe the debt, request a validation letter from the creditor. The letter will provide details about the original debt with the latest updates about the account as well as information about how you can challenge it. Remember,

  • If the debt has already been paid, send a cease and desist letter to the collections agency;
  • If the debt’s not yours, challenge the debt in writing within 30 days of your first contact with the collectors.

Has The Statute of Limitations on the Debt Expired?

You may not owe the debt because the statute of limitations has expired. Most states have laws concerning how long collectors have to clear the time-barred debt. Here in Arizona, debt collectors and creditors generally have a six (6) year window to sue debtors.

Why Making a Payment on Old Debt is Tricky

Making just one payment on an old debt can reset the clock on the statute of limitations and give the creditors new legal life to sue you for collection.

Facing Crippling Debt? Call The Oswalt Law Group for Solutions

If you’re facing insurmountable debt, we urge you to contact us here at The Oswalt Law Group to discuss all of the options available to you. The first consultation is always free so call us at 602-225-2222.  

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