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Zombie Debt

Candlefocus Editor
Zombie debt is a term used across the debt relief industry to describe debt that has been discharged through a statute of limitations or an alternate debt resolution, such as bankruptcy. The "zombie" portion of the term refers to the fact that this past-due debt has been brought back from the dead, often in the form of attempts from debt collectors to collect on the debt even though it has passed the accrued amount of time that a creditor is allowed to collect on it. Zombie debt typically arises when a collection agency purchases past due debts from creditors at a discounted rate, claiming the right to collect on them.

When a lender or creditor sells its right to collect on a past-due debt, this means the debt no longer resides with the original creditor, but rather the debt collection agency that purchased it. As a result, the statute of limitations begins to run again once the debt is transferred to a collection agency. The statute of limitations is the amount of time that a creditor has the right to sue a borrower. The time period varies state-by-state, but typically ranges from from 3 to 6 years. Once your debt has been charged off, the creditor or debt collector must follow the laws and regulations of your state as it pertains to debt collection, or the debt is void.

Debt collection agencies can take advantage of this by sending threatening letters in an attempt to get the debt-holder to make a payment or agree to set up a payment plan. Despite the fact that the debt has already passed the statute of limitations for it to be legally collectible, many people feel intimidated by collection agencies and make the payment out of fear, not knowing that they actually have no legal obligation to do so.

If you receive letters or calls from collection agencies, it’s important to know your rights. You are not obligated to speak with debt collectors, and they are not allowed to attempt to scare or cajole you into a payment. It's also important to be aware of the statute of limitations in your state. If your debt has passed its statute of limitations, you’re not legally obligated to pay back the debt, regardless of the threats and temptations a debt collector might use to try and get you to pay.

Overall, Zombie debt is a form of debt that has been discharged through a statute of limitations or an alternate debt resolution, such as bankruptcy. Knowing your rights, understanding the statute of limitations, and being aware that you do not legally have to pay back a debt if it has passed the limit will help you avoid being taken advantage of by debt collectors who are attempting to bring debts back from the dead.

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