Expert advice on how to spot and protect yourself from ‘zombie debt’

Zombie debt may be money you owe that is past the statute of limitations for collection
Published: Jan. 30, 2023 at 4:22 PM EST
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InvestigateTV - The Consumer Financial Protection Bureau (CFPB) reported in 2019 that 28% of Americans with a credit report had at least one debt in collections, however, some of this debt may be “zombie debt”.

“Zombie debt” is a term used by the credit industry to describe debt that even after it was paid, the statute of limitations expired or in some cases was never owed at all resurfaces in collections. When the debt returns, collection agencies may still attempt to collect a debt, leading it to possibly reappear on your credit report and negatively affect your purchasing power.

Ted Rossman with said the moment you get a call about old debt you need to investigate it.

“The first step is you want to actually verify that this is real and that this actually belongs to you,” explained Rossman “because sometimes it’s just an outright scam or sometimes it’s a mistake and it belongs to somebody else, or you actually did pay that off.”

Rossman shared advice for what to do if you have been contacted by a debt collection agency:

If you do not recognize the debt, ask for verification from the collector. A reputable debt collector should be able to provide proof the debt is yours. They are required to do so in writing by law.

Next, Rossman suggested looking up the statute of limitation for old debt in your state - it typically varies from 3 to 10 years.

Rossman added that, even if the debt is beyond the statute of limitations, you still may have ethical obligations to pay your creditor.

If you are unsure of the debt, do not make any payments until you do your research. Making even a partial payment could reset the statute of limitations for the debt.

Finally, he said if someone is pressuring you to pay an old debt or demanding your pay immediately or asking you to pay with gift cards or cash apps, it is likely a scam.

For more information on debt collection, visit the CFPB website or read this article explaining the process and your rights.

UPDATE: InvestigateTV released a more in-depth look at Zombie Debt here.