Ask Stacy: Zombie Debt Haunts Consumer

Photo (cc) by kevin dooley

Today we have a question about a scary consumer topic: zombie debt.

I have absolutely got to get this question answered SOON! No idea where to turn, watch your news segment nightly have never seen this answered: can old (paid off actually but still apparently lurking out there) “ZOMBIE DEBT” be loaded by the zombie-debt collection people on a consumer’s new credit card? HERE’S WHY I ASK. After years of going without any credit cards having paid all off 11 years ago, I now HAVE TO GET A CREDIT CARD my employer requires it for business travel – I have to charge hotel/car rental and await reimbursement(and hotels/car rental agencies DO NOT accept debit cards, well some hotels will accept debit for room reservations but when you get there you HAVE TO give them a credit card “in case” you “damage” their room, that’s how it was explained to me – NO debit card accepted). BUT I still occasionally get come-ons on this old paid off zombie debt and am terrified they will find out I have a new credit card and promptly load it on the new account. Is this still allowed under new law? What do you do if it happens??? I have a new job, I sure can’t afford a lawyer that charges ten times an hour what I earn an hour!
– Sarahkate

Here’s your answer, Sarahkate:

No, a collection agency can’t put old debt on a new credit card under any law, old or new. As for what you call “zombie debt”: I don’t believe in ghosts.

If a collection agency is contacting you about a debt, step one is to ask them to provide written proof that you owe it. If they can’t, you’re off the hook. If you’ve paid the debt, provide whatever proof you can that it’s satisfied and their collection efforts are in error.

If you haven’t paid the debt, step two is to check your state’s statute of limitation laws. A debt is only legally collectible for a specified period of time – for example, credit card debt is not collectible after as little as three years in some states and for as long as 15 in others. Also note that if you make even one small payment, you can start the clock ticking again – that’s one reason why you really need to be careful when dealing with collection agencies. Here’s a list of state statue of limitations from about.com.

Step three: If you legitimately owe the debt that falls within the statute of limitations, deal with it. At least talk to a lawyer: Normally, the first consultation is free. It’s important not to ignore it, because this is a situation where “zombie” debt can rise from the dead and kill both your credit and peace of mind.

Worst-case scenario? If the debt is large enough to justify legal action by the collection agency, they could go to court, get a judgment against you, and start looking for assets to seize or wages to garnish. And as you are probably already aware, unpaid debts aren’t a great thing to have reflected in your credit history.

Don’t think expert legal assistance is beyond your reach: It could be free. If a debt collector breaks the rules when attempting to collect a debt (and many routinely do), they’re liable for damages, including your attorney’s fees. See our story Abused by a Debt Collector? Get a Free Lawyer. And even if the debt is valid and it needs to be repaid, a good lawyer might be able to help you negotiate a low settlement, as well as one that doesn’t hurt your credit history.

Bottom line? If you’re haunted by any kind of debt – zombie or otherwise – deal with it. We’re blessed with strong consumer protection laws in this country, but they can’t help you if you don’t use them, or talk to someone that will.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Small Appliances You Don’t Need — and What to Use Instead
7 Small Appliances You Don’t Need — and What to Use Instead

Here’s how to get the job done without blowing money — or losing counter space.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

3 Costly Social Security Mistakes That Women Make
3 Costly Social Security Mistakes That Women Make

Women face unique challenges when planning for retirement and making these mistakes can result in a skimpier retirement.

Never Buy These 12 Things at a Thrift Store
Never Buy These 12 Things at a Thrift Store

Sometimes a great deal is not worth it — or, even worse, is dangerous.

10 Common Ways Seniors Get Scammed
10 Common Ways Seniors Get Scammed

Here’s what to watch for to make sure you don’t fall prey to some of the biggest rip-offs targeting seniors.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Mistakes Everyone Makes When Shopping on Amazon
9 Mistakes Everyone Makes When Shopping on Amazon

Are you losing money due to any of these missteps?

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

6 Groups That Won’t Get a Second Stimulus Payment
6 Groups That Won’t Get a Second Stimulus Payment

Don’t expect to receive a $600 coronavirus check if you are on this list.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

The Minimum Wage in Every State in 2021
The Minimum Wage in Every State in 2021

The federal minimum wage may not change in 2021, but many states have plans to increase their wage requirements.

15 Free Streaming Services to Watch While Stuck at Home
15 Free Streaming Services to Watch While Stuck at Home

These free movie streaming sites offer thousands of movies and TV shows, including recent releases and beloved classics. If you love free movies, online sites are where you need to look for the best list of features that are just one easy click away.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

4 Tax Credits That Will Be More Generous in 2021
4 Tax Credits That Will Be More Generous in 2021

If you are eligible for these tax breaks, they will slash your federal income tax bill — dollar for dollar.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

The Worst Day of the Year to Buy a Used Car
The Worst Day of the Year to Buy a Used Car

If you need a new set of wheels, avoid shopping on this day.

7 Stores That Match — or Beat — Amazon Prices
7 Stores That Match — or Beat — Amazon Prices

These retailers offer some of the most consumer-friendly price-match policies anywhere.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.