There are numerous federal rules that specifically limit the kinds of efforts that businesses can make to collect on different types of debt. Typically, those who pay their debts in full or reach a settlement agreement with a creditor won’t have to worry about future collection activity on those debts. Those who file for personal bankruptcy and receive a discharge also have protection from future collection activity related to the debts included in their bankruptcy discharge.
Unfortunately, businesses are often eager to collect as much as possible, even when it means infringing on the rights of others. One of the more common and abusive tactics employed in recent years involves the reselling of debts that are already settled and paid. Sometimes, businesses with inaccurate internal records may turn over certain debts to for-profit collection companies. Other times, malicious individuals with information about prior financial obligations will compile lists of those debts, many of which are no longer valid and will sell those debts to fly-by-night businesses trying to trick people into submitting unnecessary payments.
Zombie debt may come back to haunt people with little warning
Experts have coined the term “zombie debt” to refer to the practice of bundling and reselling financial obligations that are not legally enforceable anymore. These include debts someone has agreed to settle, debts that someone has paid in full, debts that are old enough to come off of a credit report and debts included in a bankruptcy discharge.
Collection agents typically need to identify themselves and the company that they work for when calling individuals. They also have an obligation to provide records validating the debt, including the date when it originated and the name of the original creditor.
If a former debtor record can make a detailed record concerning the communication they’ve had with a company attempting to collect on a zombie debt and the origin of their financial obligations, it should be easier to file a claim against the business violating the law and engaging in inappropriate collection efforts. Fighting back against attempts to collect on zombie debt can protect an individual facing abusive collection communication and possibly other people targeted by that same organization.