When you repeatedly miss monthly payments, your creditor may send the account to a debt collection agency. Debt collectors then pursue you in order to get the account paid off. Of course, we want consumers to be responsible and pay off debt, but we also want them to be aware of the law and know their rights. Depending on which state you live in, there is a statute of limitations regarding how long debt collection agencies can hassle you. After this time, you no longer legally owe the debt to them. But, a new and haunting trend is developing–Zombie Debt!
How Debt Collection Agencies are Scaring Consumers
Debt collection agencies buy and sell accounts all the time. Because of this, they sometimes bring accounts back to life (creating “zombie debt”), even after the statute of limitations has passed. You may have an account over a decade old, but a new collection agency can buy it and then come after you. Legally, you are not obligated to pay, but there are 3 steps you need to take.
#1 Don’t Talk
Engaging with debt collection agencies, especially if you make a promise to pay, can be extremely dangerous. By doing this, you may “reset” your statute of limitations, taking you back to square one.
#2 Stay organized
Debt collection agencies sometimes sue consumers over these old (now zombie) accounts. It’s extremely important that you have proof about the age of your account. And one more thing: show up in court. Failure to appear in court could end up making you liable for the debt.
#3 Avoid the Zombies altogether
Hopefully you can avoid the problem of zombie debt altogether. Here are a few tips:
- Send a cease and desist letter via certified mail (look online for templates). The collector will then only have one more opportunity to contact you via phone.
- File a credit bureau dispute to remove any items older than 7 years.
- Pay off the account before the seven year mark. Doing this can give a slight boost to your credit score.
- Budget wisely. Seek credit counseling or a Debt Management Plan before your problems get out of control.
Worried about debt collectors? Start with a FREE budget review and credit counseling session.
What’s your scariest debt story?