In a lot of cases, credit card debt occurs because a person has simply spent too much of their money. However, not all credit card debt is your fault. Some people unknowingly become the victims of identity theft. Thieves get a hold of their personal information, charge hundreds or thousands of dollars on their credit card (or perhaps use the information to open an account in the person’s name and then charge on that) and aren’t caught. Once the theft victim has found out about what has happened and has reported the theft, they assume that they’re in the clear. The debt that occurred because of identity theft is forgiven. Or is it?

Zombie debt refers to debt caused by another party that is seemingly forgiven, but then comes back to haunt the innocent individual to which the debt is supposedly attributed to. It’s something that can wreck lives and hurt credit scores. In this article, we’ll be going over how it happens and how you can end it.

How Zombie Debt Occurs

Credit card companies who cannot collect on debt (this can be debt by deadbeats or debt caused by identity theft) will hang on to the debt record for a while. Eventually, usually after 5-10 years, they’ll sell this information. Collection agencies will buy this information for mere pennies on the dollar. They then take the information and try to collect on the unpaid debt.

Why Zombie Debt Occurs

Zombie debt is quite profitable. Collection agencies can buy unpaid debt information for up to 12 cents on the dollar. Since most unpaid debt ranges from $500-$5000, there is a lot of money to be made. Even if the collection agency is only able to collect on 25% of the debt, that’s still a huge return on their initial investment of pennies on the dollar.

The evidence of the effect that zombie debt has on collection agencies is very easy to see. Over the past 5 years, debt collection companies have seen their profits increase considerably. What was once unprofitable (collecting on old debts) is now a nearly billion dollar a year industry. The collection agency business is definitely booming.

Things might be great for collection agencies, but it isn’t so good for the customers who are having to deal with the effects of zombie debt. They are left with potential lawsuits (if the statute of limitations hasn’t passed), harrassing phone calls and potential damage to their credit report. It is a huge hassle for them.

What Happens

After buying the information, the collection agency will then attempt to collect on the debt—even if the statute of limitations has passed. They will begin calling the person to whom the debt is attributed and will begin asking for money.

Collection agency workers are trained to get the money at all costs. They often resort to harassment in order to get the money. They will verbally abuse customers and make false promises, just to get the money. There are many abuses collection agency workers are capable of, some of which are listed below.

• Demanding money from the customer, even if the debt has been legally forgiven or paid off. Collection agencies will demand money they shouldn’t be demanding in the first place. They may threaten lawsuits in this case.
• Verbal abuse. Some collectors will verbally assault people. This is, of course, against the law, but collectors still do it anyway because it intimidates people into paying money they really shouldn’t have to pay.
• Illegally “Renewing” Debt. Collectors will try to tell the credit bureaus that a debt is brand new, even if it is, in fact, several years old. They do this so that they can have more time in the statute of limitations to demand repayment of the debt.
• “Fixing” Credit Record. Many people have reported collectors who will call and state they can remove a negative record from your credit report in exchange for payment of the debt. This is something that is completely untrue and can even revive the debt and lead to lawsuits.

All of the abuses mentioned are illegal and no customer should have to put up with this behavior. That’s why we’ll next be going over how to fight back.

How to End Zombie Debt

You do not deserve to be harrassed. You should not have to put up with it. As an American citizen, you are entitled to certain rights. One of these many rights is to not be harrassed by anyone for any debt. Yes, they can and should collect on legal debts, but not in an illegal fashion.

Here are ways of fighting back against zombie debt.

• Know Your Rights. Collectors can only do so much within legal reasoning. They are not allowed to verbally harrass you, demand payment of debt past the statute of limitations (check with your state’s web site for what the statute of limitations is in your state) or do any of the other bad behaviors mentioned. Hang up immediately if they violate the rules.
• Don’t Answer the Phone. By answering the phone, you are opening yourself up to illegal verbal abuse and many other things. If what they are doing is wrong, you have the option of simply not answering the phone.
• Get a Lawyer. This is especially a good idea if they try to collect on a debt that has been forgiven legally, but hasn’t passed the statute of limitations. A lawyer can guide you through the process of protecting yourself from unwarranted threats.
• Write a Letter. Write a letter to the company stating that you do not wish for them to continue contacting you. Make sure the letter doesn’t specify that you owe debt to them and that it is sent certified mail. They have to respond to certified mail and respect your wishes—otherwise, they are going against federal law.
• Request Credit Reports Frequently. Some collectors are known to repost old debts on credit reports and thus hurt the individual’s credit score. If you see such a debt on your credit score, contact the credit bureau and fight vigorously for them to remove the debt from your credit report.
• Keep Records of the Calls and Letters. If the collection agency will not stop contacting you, you should keep records of the calls (record them if necessary) and letters. Then report them to your local credit bureau.

If you try all of the techniques listed above, you should be able to kill zombie debt.