If you’re considering bankruptcy, you’re likely overwhelmed with debt. You’re probably getting collection calls and notices regularly. You may have actually lost track of just how much you owe and to whom. Some people deal with overwhelming debt by going into denial about it. Unfortunately, that can mean not looking at the bills and collection notices to even make sure that they’re accurate.
While much of your debt may be all too real, some of it may be “zombie debt.” This is a term often used to describe the following:
- Debts that have already been paid off or settled for a lower amount with the creditor
- Debts that are past the statute of limitations for collection (which is usually at least three years)
- Instances where a debt is in error – for example, because a charge was properly credited after a return or cancellation or there was a duplicate charge
Most of the time, when collection agencies try to collect on a zombie debt, they don’t realize that’s what it is. The original error may have occurred years ago, and the debt may have gone through multiple collectors.
Sometimes, what started out as a valid debt has gone past its statute of limitations and no longer has to be paid. Some unethical collection agencies (commonly called “debt scavengers”) continue collection efforts even if they know the money is no longer owed.
Don’t “reanimate” your zombie debt
If you have zombie debts like those described above, you’ll want to straighten out the matter with the collection agency and/or the original creditor. Some people, unfortunately, unintentionally “reanimate” a zombie debt. For example, if a debt is past the statute of limitations, but you make a payment, that can make it once again a legitimate debt.
It’s crucial to know just what kind of debt and how much you actually have before making a decision regarding whether to file for bankruptcy or take other steps to deal with it. Wherever you are in this process, it can help to have experienced legal guidance to help you make the best decisions for your financial future.
