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Dealing with ‘zombie debts’ after bankruptcy

| Jan 12, 2017 | Bankruptcy, Bankruptcy |

Sometimes it seems like old debts just won’t die. These “zombie debts” may be past the statutory point where the creditor can sue for breach of contract (which, in Michigan, is 6 years), and they may even be from before you received a bankruptcy discharge, but that won’t stop some collectors from trying to get you to pay.

What happens is that debt scavengers buy up old debts from various companies in bulk, for pennies on the dollar. Then the debt scavenger turns around and aggressively tries to collect on those debts in full.

Your first sign that a zombie debt is clawing at your pocketbook is usually a bill for the full amount of the debt. It may be so old that you no longer even recognize the name of the original creditor–if the original creditor is even listed. It isn’t uncommon for a debt to be sold several times, passing hands from one debt scavenger to another, so it’s possible that the creditor listed is actually a previous debt scavenger instead of a company you once owed.

Some of these debt scavengers have been known to employ illegal scare tactics, by threatening to sue or have people arrested for fraud over the old debt. They’ll also engage in other harassing tactics, like threats of wage garnishment, designed to intimidate you into paying as much as they can manage to get out of you.

Don’t fall for it.

The Fair Debt Collection Practices Act gives you the right to demand a validation of the debt including the amount, the name of the collection agency, the original creditor and the original account number. You can also ask for additional proof like the contract that you supposedly signed agreeing to the debt, and proof that the current collector actually now owns the debt.

Compare what information you get back to your bankruptcy records. If the original debt was there, which it should be if it was incurred prior to your petition, then the debt was discharged and cannot be collected. Harassing you further about it is in direct violation of the federal bankruptcy relief laws that protect you.

Send a notice back to the debt scavenger giving them the date of your bankruptcy discharge and case number. Include your attorney’s contact information as well. That should be enough to finally put the zombie debt firmly back in the grave.

Source: Bankrate, “When debt won’t die: How to battle ‘zombie debt’,” accessed Jan. 12, 2017

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