Zombie Debts, a Discussion

Voodoo is an African belief that has transposed itself in America among the African-American population. In real terms Voodoo relates to the old tribal religions of Africa, from where it has originated. Part of the Voodoo belief is the Zombie. The Zombie refers to a person who though dead comes alive. It also means ‘risen from the dead’. This word is also used in America to classify old and forgotten debts that have passed the statute of limitations. These debts that resurface after many years are often called Zombie debts.

Zombie debts are a reality in the United States and there are people who make it part of their business. These companies or individuals buy these debts at a heavy discount and try and make some money out of it. Some these debts are nearly 8-10 years old and yet they are bought by these collection companies.

Zombie Debts

The principle behind this business deal is simple. All debts at some point of time become uncollectable as they have passed the time period laid down in the statute of limitations. This time period could range from 3 to 7 years. This period varies from state to state. At this point collection companies who wish to make some money from this deal will buy the debt at a fraction of its value. It can be understood that older the debt the less its market value. Thus a debt over 8 years will cost a fraction of the money that would be paid for a debt that is 3 years old.

In earlier times the collection agents had a free field and could use any method to recover the outstanding debt. This could include threats and intimidation. However The Fair Debt Collection Practices Act passed in 1996 has put a premium on all forms of coercion. This act lays down the limits under which a collection agency can run and any infringement of this can be reported to the authorities. However there have been cases where the collection agents subvert this act to collect something out of the outstanding debt. Yet, despite this act, the debt that is very old does not debar collection agents from buying the debt and trying to recover it. The aim of the collection agent who has purchased the debt at a very, very low price is to recover a portion of the debt and thus make some money in the bargain.

Re-Aging Debts

These zombie debts can appear at any time and this is often referred to as re-aging of debts. This is illegal but it happens all the time. There have been cases recorded where an original debt that has been discharged in a bankruptcy re-appears as a Zombie debt. This re-aging of debts needs to be guarded against. But if it does happen some prudent action is required to contain the damage. Thus an individual need to be aware of the following.

a) He must as a rule check his credit report at regular 債務重組失敗 intervals and see if any such entry is there. In case such an entry appears it is incumbent on the person to check with the credit bureau and get the entry rectified.

b) Be informed. The fact that you are not aware of the statute of limitations will not hold water. Thus in case contacted by a debt collector be aware of your rights and act so. You can follow-up by contacting your state’s Attorney General’s Office and the Better Business Bureau. This is not the end and it should be followed up by contacting the agency that issues the license to a collector in the state you live and complain about this ‘zombie’ debt that has been re-aged. Remember all collectors have to be licensed.

The debt – buying industry is lucrative business and information available shows that some of these collection companies have earned enormous sums of money running into thousands of dollars by purchasing Zombie debts. They will even purchase debts that have passed the statute of limitations and try and recover some part of the debt. There have been cases where a debtor with a 9-year-old debt has been approached by these agents.

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