Zombie Debt

Zombie debt summary:

• Zombie debt is old debt that may be uncollectible.

• The debt might not belong to you or it may be time-barred, settled, or paid off.

• If you're contacted about a debt you don't recognize, don't discuss it or admit to owing it. Force the collector or creditor to provide proof that you owe it and that they have the right to pursue you for it.

Zombie debt definition and meaning

Zombie debt is a nickname for debts that refuse to die. These accounts are generally old, poorly documented, and often not collectible. Some debt buyers make a business of purchasing these accounts and then aggressively contacting consumers about paying the balances. Because they often pay pennies on the dollar for these old balances, collecting them can be very profitable. 

Key concept: Zombie debt is a debt that's old and may not be collectible.

More about zombie debt 

Zombie debts are old accounts. For example, maybe an unpaid credit card balance from your college days went into collections, and you forgot about it or never knew about it. Maybe it was your roommate who bounced a check and somehow a collection account ended up in your name. Who remembers? And that's the point. 

Zombie debt comes back to life again and again, every time a debt buyer purchases the right to collect it. There may be little or no documentation about the original balance, who the creditor was, or who originally owed the money. The original creditor may have sold the right to collect it 10 years ago for 50 cents on the dollar. That buyer made a few attempts to collect the debt and then sold it to another buyer, perhaps for as little as 10 cents on the dollar. 

Zombie debt: A comprehensive breakdown

The main thing to understand about zombie debt is that just because someone contacts you out of the blue about a debt doesn't mean that you owe it or that they have the right to pursue you for it. 

Here's what you should do when contacted about a debt that's unfamiliar to you:

• Refuse to discuss the debt. If you say anything, say that you dispute it and won't discuss it until it's been validated.

• Don't be drawn into admitting that you owe it. Don't discuss settling it or payment plans or anything else. If your debt is time-barred, which means it's too old to be collectible in your state, discussing it could make it collectible again. If a debt collector sues you for a time-barred debt, you could ask the judge to throw out the lawsuit.

• Send a debt validation letter. Send the letter within 30 days of being notified about the debt. This forces a debt collector to stop trying to collect until the debt has been validated. That means the collector must provide details about the debt in writing or leave you alone.

Assuming the debt is valid, you can then decide what to do about it: Ignore it (probably fine to do if it's time-barred or not yours), negotiate with the debt collector (keeping in mind the debt buyer probably paid very little for it), or pay it.