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Beware Zombie Debt

By Encino Bankruptcy Attorney on August 10, 2017

Zombie movies and TV shows are all the rage, but we know they don’t really exist. Actually, there is one kind of zombie out there, lurking in the shadows and waiting to pounce—“zombie debt.” What is zombie debt? Zombie debt, also called “phantom debt,” is debt that is not legitimate because it is old, defaulted, discharged in a bankruptcy, or never actually owed.

Many people don’t realize it, but there is a statute of limitations on the collection of debt. In California that statute of limitations is four years. This means that a creditor has four years to try and collect a debt. After that, the debt is invalid.

So health clubs, credit card companies, health care facilities, and the like, will sell off the debts they’ve given up on trying to collect that are nearing the statute of limitations. Third-party debt collection agencies buy these debts up for pennies on the dollar, and then attempt to collect on them, even if they’re past the statute of limitations. Their hope is that you don’t remember the debt; don’t know it’s expired or has been discharged, and pay it. It’s essentially a scam. Some of these shady debt collectors will even try to collect on the debt of someone’s deceased parent or someone with a similar name. So, next time you get a call or letter from a debt collector, BEWARE. Never make a payment on a debt you aren’t positive that you owe and know, for certain, is still active. If you make a payment, of any size, on a debt that is past its statute of limitations, it will reset the statute of limitations and the debt collection agency will have four more years to bother you.

If a bill collector tells you that you have a debt, and you have the slightest bit of doubt about it, contact an experienced debt relief attorney. The legal team at Encino’s Nader Law Firm has been protecting the interests of its clients for over 20 years. Call their office for a free consultation at (800) 568-0707.


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