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Debt Collectors & Zombie Debts - Be Informed

Apr 10, 2008
In the news recently, I've come across a lot of information regarding debt collection agencies and their practice of collecting money from years-old debt. For those in the know, this is often referred to as "zombie debt" since, quite accurately, it seems to have come back from the dead.

When it comes to "zombie debts," you need to know your rights and do some research. If you have spent years improving your credit, the appearance of zombie debts can drag your credit score down. In an instant, your score can plummet. How? Zombie debts rise from the dead. Paying them has the potential to bring that debt back to "life" and it shows up negatively on your credit report.

And all because you are doing the responsible thing.

A friend of mine recently received a call from a collection agency regarding a debt from over a decade ago (and on top of that, he knows for a fact that this bill was paid). He took down the information and gave me a call. I told him that collectors cheaply buy old debts from companies. And, as per usual, they're aggressive and unceasing in trying to make you pay for old debt.

A quick online search regarding this issue turned up too many results, which only underscores how big of a problem this is. Debt collectors will sometimes go after these zombie debts-even if they have been paid. For those of you with credit histories that are squeaky clean-just as my friend's credit history is-continue to be aware of this issue. In his case, the financial record was lost and he almost paid the bill thinking it would be the easiest option.

If you find that you're being pestered by a deb collector for an old debt, then know your rights. Jump online and do a quick internet search. You will be surprised at what you find.

You should also contact your state attorney general's office to find out the statute of limitations on years-old debts. You should be aware that there different rules apply not only in different states but also in dealing with the statutes for different types (health care debts may have a different statute of limitation then a credit card debt, for example). Even if it is outstanding, if it falls beyond the limits of the statutes, then you are not required to repay it. (I suggest that you speak to a financial professional once you have all the information you need, though.)

Furthermore, many financial professionals suggest that, if you are contacted by the collection agency for a zombie debt, you should send them a certified letter with a return receipt asking for the details of the debt they are trying to collect.

As always, know your rights and do your research. If you are confused about an issue, you should always talk to your own financial advisor so you can make an informed decision. In fact, it is always a fantastic idea to check and double-check with those who know.
About the Author
J. Richard Shanley has created an incredible debt reduction tool that can help discover the best approach to debt elimination. Head over to the TheDebtSlayer.com and buy it today. You can't afford to wait.
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