Definition and Examples of Zombie Debt
Zombie debt refers to old debts that are no longer legally enforceable but suddenly show new activity from a debt collection agency. Zombie debt is an old debt that is no longer legally enforceable but suddenly shows new activity from a debt collection agency.
How Does Zombie Debt Work?
Zombie debts can be revived when a new debt purchase buys an old account. They can also be revived if a collection agency notices activity in your credit report indicating that you may be motivated to pay, such as applying for a new credit card or a mortgage loan.
Do I Need to Pay Zombie Debt?
Zombie debts that appear on your credit report can affect your ability to obtain credit cards, loans, and other credit-related services. If you are trying to qualify for a loan to buy a home or car, you may feel compelled to pay the debt to improve your credit score. Unfortunately, paying zombie debt can give it more life.
Remember that making a payment, even a small one, reactivates the statute of limitations, giving the collection agency more time to sue you. If you are not ready to pay the full balance, avoid any payment towards the debt.
Collectors are allowed to try to collect debts, but you are not obligated to pay, especially if you do not actually owe that debt. Before deciding whether to pay zombie debt or not, request written verification of the debt.
Sometimes, collection agencies lack the legal documentation proving that you owe the requested amount. Once the collection agency receives your request, it is required to provide proof or cease collection on the account – meaning they can no longer report the account on your credit report.
Source: https://www.thebalancemoney.com/what-is-zombie-debt-5121161
Leave a Reply