There is a growing crisis with zombies across the country. Credit card zombies. Just like the mindless fictional creatures depicted in horror movies that will not die and relentlessly pursue their victims, many Tampa Bay residents are being chased by debt collection agencies pursing “zombie credit card debt
“Zombie credit card debt collection is a real troubling phenomena,” says Polly Bauer, international credit card expert and co-author of the new book, The Plastic Effect: How Urban Legends Influence the Use and Misuse of Credit Cards. Many debt collection agencies routinely buy debt for unpaid credit card balances from credit card issuers. The debt is typically bought for pennies on the dollar. For example, if you had an unpaid credit card balance of $500 that was written off by a credit card issuer, a debt collection agency may buy the debt instrument for $1-$2. The debt collection agency will then try to collect the original unpaid $500 credit card balance along with collection fees and attorney fees added on top of the original total, which may amount to several thousand dollars. If the debt collection agency can collect any portion of the debt, they get to keep all the money and the credit card issuer does not receive any re-payment.
Bauer, former CEO of the Credit Corporation of the Home Shopping Network (HSN), says “Zombie debt occurs when a debt collection agency tries to resurrect credit card debt that is time-barred or has already been paid in full.” Creditors and debt collection agencies have a limited time to pursue debtors for non-payment of credit card bills. The time limit, called the statute of limitations, was designed to protect the debtor from claims of unpaid debt that may be asserted years after all evidence associated with the debt may have been lost. The statute of limitations varies from three to ten years depending on the state. In Florida, the statute of limitations for collecting old debt is currently five years.
“No one is immune from the attack of Zombie credit card debt. I recently received a call from a debt collection agency for outstanding credit card debt on a credit card for a gasoline company. Not only had I paid the card balance off in full, I also closed the credit card over 10 years ago,” says Bauer. “The person who called me was from out of state and tried to get me to admit the debt was still owed and put me on a payment plan to re-pay it right away. If I did not immediately agree to his re-payment terms, he indicated the collection agency would initiate a lawsuit against me.”
What should you do if you receive such a call from a Zombie debt collector? Attorney Stephen Lesavich, co-author of The Plastic Effect, says “The consequences of Zombie debt can be devastating. So be prepared.” Lesavich suggests the following strategy if a Zombie debt collector is stalking you.
First, do not acknowledge the debt or agree to anything orally on the phone. In some instances, orally acknowledging an old debt can re-age or re-toll the statute of limitations. Instead state clearly something like the following: “I do not acknowledge the debt at this time. I request all further interactions for this matter be done in writing.” Zombie debt collectors use every trick in the book, from making you feel guilty, badgering and harassing you and threats of legal action against you.
Second, request the Zombie debt collection agency provide proof you actually owe the debt. Make your request in writing by sending a letter by certified mail with delivery confirmation within thirty days of the first contact. Many times the Zombie debt collection agency will not actually own your debt instrument or cannot provide you with proper paperwork. The Zombie debt collection agency may simply have a list of debt including your name, address and an amount of debt. If the Zombie debt collection agency does provide you with any paperwork, verify the debt actually belongs to you.
Check all relevant data including the name, address, date of birth, social security number listed on any paperwork you receive. In numerous instances, a person has been incorrectly targeted by a Zombie debt collector because they have a common name, living at an address of a previous debtor or a social security number in which one or more numbers has been transposed. Also check all dates associated with the debt. Even if you actually owed the debt, the statute of limitations on the debt may have already expired.
Third, obtain a copy of all your credit reports. Many Zombie debt collection agencies will intentionally (but inappropriately) report an old debt several different ways on your credit report adding several negative, but false entries, which will immediately lower your credit score. A low credit score affects your ability to obtain additional credit, the rates you pay for insurance, an amount of interest you pay to borrow money and even your ability to rent an apartment, obtain a new cell phone or connect utilities. Zombie debt collection agencies may also intentionally report old or expired debt as a new debt or report a new date of delinquency for expired debt as an attempt to reset the statute of limitations and bring the debt back from the dead.
U.S. Federal law allows every person in the US to obtain one copy of their credit report from each of the three credit reporting bureaus, Equifax, Experian and TransUnion, each year for free. More information about obtaining free credit reports can be obtained on the web-site (www.freeannualcreditreport.com). If you notice any incorrect or invalid entries on your credit report due to Zombie debt collection, takes the steps to correct them immediately. The Federal Trade Commission (FTC) has free publication entitled FTC Facts for Consumer – How to Dispute Credit Report Errors, available online at (www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports). This publication outlines the necessary steps required to dispute and correct errors on your credit reports and also includes sample letters
Finally, if you receive any legal papers from any court for a Zombie debt collection matter, contact an attorney immediately. Many of the practices of Zombie debt collection agencies violate the U.S. Fair Debt Collection Practices Act (FDCPA). If the FDCPA is violated, you can sue or counter-sue the Zombie debt collection agency, and if you win, you may be awarded actual damages, statutory damages up to $1000, plus attorney’s fees and costs. However, if you are sued by a Zombie debt collection agency and do not hire an attorney or show up for the court hearing, you may end up with a legal judgment against you. Such a legal judgment may then become enforceable against you whether original debt or the law suit was legitimate or not.
Zombie debt collection has become a profitable business practice. So do not be surprised if your old credit card debt springs back to life, even after you thought it was dead!