Repairing Bad Credit: Getting Rid of Zombie Debt 19 Apr 2012 | By chane



One of the less talked-about aspects of repairing bad credit is avoiding and getting rid of zombie debt. While the name may conjure up visions of your favorite late night horror movie, the reality is much more serious — when collection agencies attempt to use zombie debt to get you to pay up, repairing bad credit can become much more difficult.

Repairing Bad Credit: What is Zombie Debt?

Zombie debt is a very amusing name for a very un-amusing type of debt that you may find listed on your credit files when you start the process of repairing bad credit. Like their namesake, zombie debt is past its lifespan, an old debt purchased by a debt collecting agency who intends to collect on that debt without regards to your rights, and in spite of it being long past the legal statutes that would allow them to sue.

Repairing Bad Credit: Where does zombie debt come from?

Sometimes, zombie debt is just an honest mistake such as a computer glitch that relists an old debt or human error causes it to be posted. In those instances, it’s simple to get it fixed by speaking with the creditor. However, having “accidental” zombie debt is not very likely. There are some third-party debt collection agencies out there that will use any means to try to get money. Your old debts are highly valued by this debt-buying industry, even if those debts were already paid off. Third party debt collection agencies often buy up these debts for pennies on the dollar (even the improperly listed debts) and then try to collect the entire amount from you. When you are working on repairing bad credit, you may not even realize that you are dealing with zombie debt until you start getting the harassing phone calls and letters for a bill that is 7, 10, or even 15 years older or more. Some debt collectors even add ‘collection fees’ to try to wring even more cash out of you. They will use your credit report against you to force you to pay in order to repair bad credit that shouldn’t even be on your file.

Repairing Bad Credit: Why is zombie debt so dangerous?

One of the scarier parts of any zombie movie is when the monster everyone thought was killed gets back up – and the companies who deal in zombie debt often do the same thing. They call it ‘debt re-aging’. Debt re-aging can happen when a collection company re-reports an old debt again and the seven year time period starts fresh. Or it can happen because you are a good person and try to pay them when contacted, not realizing that the debt is too old for the agencies to actually collect upon legitimately. In many instances, debt re-aging is actually illegal, and should not restart the statute of limitations at all. However, creditors have been known to sue once they manage to get even a partial payment on the debt, so it pays to be wary of any collection attempts while repairing bad credit.

Repairing Bad Credit: Fight back against zombie debt

You have the right to verify debts before you have to do anything about them, so says the FDCPA. You can send a letter within 35 days of being contacted by the debt collector and request that the collector proves you owe the debt. Always use certified mail with a return receipt. If they don’t send back some kind of document from the original creditor showing you owe it and how much you owe, and in addition that the agency Is authorized to collect from you, then they cannot legally collect from you, or add a negative listing to your credit report. This can really give you a boost when you are repairing bad credit, as it can prevent negative listings from lowering your scores in the first place. Check the statute of limitations in your state. A debt collector cannot use the courts to collect debts that are past their statute of limitations, also called ‘time barred’. They can still try to collect in other ways, however. In the case of time-barred debt, you can send a cease and desist letter that will effectively stop all collection attempts. If they file suit, you can attend the hearing with your proof that their statute of limitations has ended and you will not be held liable for the debt, even if you do owe it. If you request documents validating the debt and they jump the gun and add the debt to your credit report before your grace period is up, you can have the account deleted by filing a credit report dispute. If you include copies of your documents, including the certified letter and return receipt, your case will be even stronger. Gather your weapons – documentation, knowledge and the law on your side – and you can put up a good fight and even survive the zombie debt, repairing your bad credit at the same time.