Ten Tips for Protecting Yourself Against Zombie Debt Collectors
Collectors may try to sue you, even when the statute of limitations has expired. If you receive a summons, don't ignore it because you have a limited amount of time to respond. If you don't respond in time, you may forfeit your right to fight the lawsuit using the statute of limitations as your defense.
Collectors are no longer allowed to sue, or threaten to sue, people over old debt once the statute of limitations has passed, according to a new rule issued Friday by the Consumer Financial Protection Bureau (CFPB).
A debt collector may settle for around 50% of the bill, and Loftsgordon recommends starting negotiations low to allow the debt collector to counter. If you are offering a lump sum or any alternative repayment arrangements, make sure you can meet those new repayment parameters.
Old (Time-Barred) Debts
In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement.
Zombie debt is debt that has fallen off your credit report but, for various reasons, someone is still trying to collect. Zombie debt has often been long forgotten and has probably been written off as uncollectible.
Phantom debt or zombie debt is a debt that is old, defaulted, or not owed and is somehow haunting the presumed debtor. It generally refers to debt that is more than 3 years old, is long forgotten about or belonged to someone else – like someone with the same name or a deceased parent.
This is what we call zombie debt. Debt that is past the statute of limitations. If this is the case, then you can either call or write them a letter detailing your state's statute of limitations and demand that they remove the information from your credit reports and cease all collection activity.
Debt collectors get paid when they recover delinquent debt. The more they recover, the more they earn. Old debt that is past the statute of limitations or is otherwise deemed uncollectable is bought for pennies on the dollar, potentially making collectors big profits.
In most cases, the statute of limitations for a debt will have passed after 10 years. This means that a debt collector may still attempt to pursue it, but they can't typically take legal action against you.
If you are unable to pay your debts, you should contact your creditor to let them know and see if they are willing to write off the debt. This template is to be used for guidance and may not suit your specific situation.
Agreeing to pay: If you acknowledge that the debt is yours and agree to pay, the statute of limitations on your debt will start over. Making a charge: If you have old credit card or revolving debt and you make a charge to your account, the clock on your old debt will restart.
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