The Walking Debt

kenzombiepicNo, the title of this article does not contain a typo and it is not about the popular television series. It is about debt that will not die: the so-called “zombie” debt. You think it is dead but just when you least expect it the debt rears its ugly head, usually as a blemish on your credit report that you learn about from the finance manager at the car dealership or the mortgage broker after you have applied for a loan to buy a new house or refinance your mortgage.

Old and forgotten, but old is new for the debt buyer.

In some instances that debt is just old and forgotten, in other cases the debt has been discharged or forgiven. How is it on your credit report then? Debt is bought and sold in a marketplace that I liken to the Wild West. There is no law regulating its sale and no warranties given by the seller to the buyer that the debt is collectible or even valid. Often the debt that is sold is an entry on a spreadsheet with no other backup or documentation whatsoever. It may be sold multiple times over many years.

Debt Buyers make no effort to confirm that the debt is actually owed and no law requires them to check its validity.

The burden is on you to respond to a letter from the debt buyer called a Debt Validation Letter with a dispute notice within thirty days of receipt of the letter. If you do not dispute the debt, the Debt Buyer may assume that the debt is valid. When the new “owner” of your debt begins to collect it that company may start reporting the debt to collection agencies claiming that you owe money to the Debt Buyer.

What can be done about Zombie Debt and what weapons do you need to kill it?

What can you do about “zombie” debt? Fight back. If the debt is over the applicable statute of limitations for filing a lawsuit it can still be collected if you decide to make voluntary payments. Do not make a payment even if you think that will get the debt collector off your back temporarily. In many cases, a small payment made after the statute of limitation runs may restart a debt buyer’s ability to sue you to collect the debt. Dispute the debt as soon as you get a letter from the Debt Buyer asking you to validate the debt.

If the debt has been discharged in bankruptcy or through an accepted short sale of real estate it is time to call the lawyer?

Remedies are available under the Bankruptcy Code, the federal Debt Collection Practices Act, the federal Fair Credit Reporting Act,
and various state laws may provide relief. Some of these statues provide for the recovery of statutory damages and attorney’s fees.

Need help fighting walking debt? Call the law firm Gogel & Gogel 413-528-2698