Zombie debt

Be Careful of Debt That Comes Back to Life

by Jeffrey Strain


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When it comes to debt, not all collection agencies play by the rules. It's important to know your rights when it comes to debts that you have so that you don't feel pressured into doing something or enduring tactics that are against the law. One debt tactic that you need to be aware of is zombie debt.

Zombie debt gets its name because it's debt that seems to rise from the dead. When a debt becomes seven years old, in most cases, it should be erased from your credit report whether it's been paid in full or not. If it hasn't been paid off, your lender or creditor will most likely write off the debt as a loss. Unfortunately, they will not stop there in most cases. They will take any uncollected debt and sell it to collection companies for pennies on the dollar.

While these collection companies know that they will not be able to collect most of the money, they pay so little for it that even if they are able to collect on a few of them, they can make a lot of money. They will try extremely hard to collect at least a portion of the outstanding debt and sometimes they will engage in illegal activities to do so. One of these practices is to report the old debts to the credit bureaus as if the debts were new, uncollected bills. This is officially referred to as "re-aging" in the debt business, but is commonly referred to as "zombie debt" since it is debt that has arisen from the dead.

Although zombie debt is illegal, it's a growing problem because it is an effective way to place pressure on a person to pay old debt. Once a person has had the debt erased from their record, they are shocked to see it appear again and often want to get rid of it as soon as possible. This is exactly what the collection agencies hope for and will often offer to report the bill as paid if a person will pay a part of the debt, thus removing it from the credit report.

If you find that zombie debt has appeared on your credit report, your best course of action is to contact the credit bureaus directly and dispute the debt. If you have proof that shows the debt is over seven years old, has been paid or the debt was discharged in bankruptcy court, this proof should get the debt removed from your credit record. If you don't have proof, contact the credit bureaus and demand the collection agency show proof of the debt being legitimate and recent. While this process will take a bit longer, if they can't show the debt to be recent, it also will eventually be removed.


Jeffrey Strain is the owner of SavingAdvice.com - a website dedicated to saving you money and also writes the daily updated blog Personal Finance Advice.

Take the Next Step

  • If you haven't done it already, get your Free Credit Report from FreeCreditReport.com
  • Check the status of any debt that may be over seven years old, has been paid or debt that was discharged in bankruptcy court

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