Delinquent debts are commonly referred to as junk debt or zombie debt. Delinquent debts are worthless to the original creditor after several years and are eventually written off. Debt collectors purchase zombie debt for a fraction of its original worth and try to collect from consumers. The most common types of zombie debt are sold by credit card companies, telecommunications companies, retail credit companies and healthcare organizations. Many zombie debts may never have existed or may have been paid long ago.
Zombie debt can surface if you have recently applied for a new credit card or consumer loan. Any changes or updates to your credit report, such as a bankruptcy filing, can provide zombie debt collectors with personal and financial information. Debt collectors purchase information from telephone and internet service providers, credit reporting agencies and credit card processing centers.
The United States Fair Debt Collection Practices Act (FDCPA) was enacted to protect consumers from unfair debt collection practices. The FDCPA, regulated by the Federal Trade Commission, prohibits zombie debt collectors from using abusive, deceptive or unfair methods to collect debt. If you are receiving telephone calls from a debt collector, there are steps you can take to stop collection calls:
There are statutes of limitations pertaining to debts that protect you from zombie debt collectors. The statute of limitations varies among states and ranges from three to six years on open accounts, such as credit cards and consumer loans. The statute of limitations on an unpaid debt usually begins tolling from the date of the last activity on the account or at the time the original creditor declared the debt delinquent. This information is available in your credit report.
You should review your credit report on a periodic basis to make sure it is correct. If you have declared bankruptcy, you should send a copy of the discharge document to the debt collector. Your bankruptcy attorney can assist you in resolving zombie debt and stopping the collection efforts. Once the debt collector is notified that you are represented, all communication must be through your attorney, rather than you. You have the right to file a complaint with the Federal Trade Commission if you continue to be contacted by a zombie debt collector.