If you've ever had a company try to collect on a loan you don't actually owe, you've dealt with zombie debt. Zombie debt can be difficult to deal with, as can the companies that collect this debt. Do you know what to do when these harassing calls start to come in?
The first thing you should do if your credit card is stolen is contact the credit card company. This will help avoid serious credit problems later on.
Credit card companies usually handle the theft of a card by cancelling the card, ignoring the purchases, and contacting the authorities. You won't be charged for those purchases.
Debts are constantly being sold and resold. Sometimes you will end up owing money to an agency with which you've never interacted.
Zombie debt refers to debt for which you should not be held responsible, but which you can not seem to get erased from your record. Like a zombie, these debts seem difficult to kill.
Just because a credit company's claim is false doesn't mean it won't appear on your credit record. Always keep an eye on your credit report, to avoid false charges and damaging reports.
Identity theft can cause many problems with your credit, including debts that are not your responsibility suddenly haunting you.
You have a legal right to an annual free copy of your credit report, so take advantage of that opportunity to keep tabs on your credit.
Once a credit card company sees it is not making progress collecting on a debt, they write off the debt.
Credit companies are not in the debt collection business. They simply sell the debt to a collection agency, and the agency does the rest.
A collection agency will buy a debt for as much as twelve cents on the dollar, or for as little as a portion of a penny.
In 2006 debt collect profits (from zombie debt only) exceeded $110 billion!
While the actions of Enron and Halliburton are infamous, some of the action of NCO Financial Systems may be even worse. They have even been accused of trying to collect on the debts of the deceased from their loved ones.
In the four years between 2001 and 2005, Asset Acceptance Capita quadrupled its annual revenues.
In 2006 congress passed the Fair Debt Collection Practices Act, which limited how collection agencies conduct their business.
The Federal Trade Commission fields more complaints against collection agencies than against any other type of financial group.
The Fair Debt Collection Practices Act requires debt collectors to identify themselves. Get the collectors identity, and keep it in your records for later use.
Documentation is a powerful legal tool. The moment you get a call regarding zombie debt, you should respond with a certified letter that demands the collection agency cease all contact. Keep a copy of both the letter and the mailing receipt.
When someone files for bankruptcy, they receive a discharge letter from a court. This letter is legally binding, and can be used to block most collection attempts.
While collections agencies have the right to try and collect on a debt, federal law bars them from harassing you.
The National Association of Consumer Advocates has specialists who advise people on what to do when faced with zombie debt.