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Beware of “Zombie Debt”

Overdue Debt

Perhaps you forgot to pay your final cable bill when you moved out of your last apartment, or you thought you’d paid off that credit card you got in college, but you never did. Despite their age, sometimes these debts—termed “Zombie Debts” for their failure to die as they should– continue to follow you for years. After a debt has remained unpaid for an extended period of time, creditors will often sell this charged-off debt to debt collectors. The debt can get passed from debt buyer to debt buyer over the course of a decade or more. In fact, according to a recent FTC study, some debt collectors received payments in 2013 on debts purchased all the way back in 1996.

Consumer Debts have Statutes of Limitation

What many consumers don’t know is that there are statutes of limitations on debts–meaning that, once the debt has been in existence for a certain number of years, collection of that debt becomes time-barred. What that means is that, depending on what state’s laws apply, after a certain period of time, you either have an affirmative defense to a lawsuit brought by a collector, or the debt is entirely void. Most states’ statutes of limitation on the collection of consumer debts are between three and six years. Consumers often don’t know how statutes of limitations are applied, or how to utilize those laws to their benefit, and so time-barring doesn’t stop debt collectors from attempting to collect old debts. In fact, statutes of limitation on consumer debts are very complex, making it worthwhile to consult an attorney before attempting to use such laws to avoid payment of consumer debts.

Ways to Challenge Debt Collectors

According to the FTC, debt collectors often don’t have proper account documentation for the debt, or any proof that the debt was actually incurred by the person from whom they’re trying to collect. Since debts can change hands so frequently, official records of the debt are often lost. According to a recent FTC study, consumers disputed only 3.2% of debts that debt buyers tried to collect, and only about half of those debts were verified by the collectors. After a debt was challenged, it was resold to other debt collectors only 2.9% of the time.
You might think that the best course of action is to begin making payments on debts when collectors start to call while you figure out what’s going on. However, this might restart the clock on the statute of limitations on the debt, reviving the zombie debt into one that debt collectors can validly collect.
Don’t sit back and let debt collectors take money to which they’re not entitled! If you’re being approached by a debt collector for a consumer debt that seems suspicious or that you don’t remember incurring, contact Lanna Kilgore PLLC to help you navigate the murky waters of debt collection.

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