What is Zombie Debt and can it still affect you?

[MUSIC] Hi there, I’m Michael Bovee
with Consumer Recovery Network. Thanks for tuning in to our
YouTube Channel DebtBytes. Today I’m gonna talk
about zombie debt. It’s scary. So, look, the definition,
or what most of us consumer advocates refer to
as zombie debt, is debt that really
can’t hurt you, so it’s kind of a misnomer
cuz zombies kill, right? So what you’re looking at is a
condition where your debt is old enough, it’s gone unpaid long
enough, to where, in your state, there’s a limitation on how long
a debt collector or creditor can use the courts in their
efforts to collect from you. It’s a statute of
limitations to bring that collection action into court. As soon as that time’s up
then some of the teeth, in fact the vast
majority of the teeth, are removed from
a debt collector. If you consider a debt collector
a barking dog then they’ve got all this teeth when
they can sue you and cause a lot of
harm in your life. When you’ve removed those teeth
they are just a barking dog and they’re gonna bump their gums. What they’ve got
left in most cases, in most states, the statute of
limitations on average is around four years, okay? But there are some with
six years and even longer. When the limitation for
this debt that’s unpaid, that is likely appearing on
your credit report has passed, which for say credit card debt, most types of debt is gonna
be seven to seven and a half years from when you
stopped making those payments. That is the last line
in the sand, really. I mean it’s the last thing that
a debt collector can leverage to try and get you to pay. Because in a lot of cases,
especially with mortgages and things like that, you’re not
gonna be able to accomplish your goal, get that loan approved
with unresolved collections. So zombie debt is often something we refer
to as past those timelines. They cannot sue you legitimately
anyway in the courts and it is no longer able to
appear on your credit report legitimately because of
time lapsing as well. So, that’s what zombie debt is. What do you do
about zombie debt? Well, don’t freak out because now you know that there’s not
a lot that they can do to you. When you are hearing from
debt collectors on debts that are really old, right. So, let’s assume for a moment
we’re talking about eight year old debt because it’s
off your credit report and it’s more unlikely it’s
not something you can be sued on in your
state any longer. So you have options. One, understand that
they can contact you. They can write to you. It’s not illegal. They have the opportunity
to reach out to you. That doesn’t go away. It’s just there’s not a lot
they can force you to do, or leverage you to pay. So here is when oftentimes, and
there’s a page on my website where I talk about this
thoroughly and have for years as an ongoing discussion
on that page in the comments. That your ability to ask and or tell, really, because it’s your
legal right, a debt collector to cease all communication
with you can’t backfire. If you can still be sued, and
you tell a debt collector in writing or verbally to no longer
contact you in any way, shape, or form,
you leave them the opportunity. The only opportunity
they have to communicate with you to try and
collect it in the court. But, if they can’t do that
anymore because the statute of limitations has passed then
all they can do is stay on your credit report. But you don’t necessarily wanna
send them a cease communication letter while they
can still report. Because what if you do have
a life changing event, where suddenly now you
have a different goal and you need that to show resolved. Or you wanna negotiate a really
good payoff or settlement, you don’t necessarily want to have
a history of saying no, go away. Or you don’t necessarily want
to have a dispute on your credit report about that because
that can impede your ability to get a loan. So I usually tend to
encourage people to say, hey, debt collector, go away. Don’t contact me anymore
in any way, shape, or form, until after it
becomes full zombie, after it can no longer show
on your credit report. You do those kind
of requests for cease communication in writing,
and I want you to send them certified mail so
that you get something back. Even a green card if you
use that where return receipt requested. You get some kind of way to
verify that they got the letter, and keep a copy of the letter
for your records too. Because if they do try and
communicate with you after that, depending on what form that
takes that’s violation, and we want to get you in touch
with somebody that can help you with that. So, zombie debt is something
that I’ve been contacted by from people over the years have
been doing this kind of work, debt relief, debt credit
information and education, for a couple of decades. And over that time, there is plenty of people who
have reached out to me and said, look, I just want to
take care of this. I know that it’s
not on my credit. I know they can’t sue me. But it’s something
that’s bugged me, and I couldn’t do anything about it,
so I didn’t. But now I can’t, and I want to. And you can still do that. No, offering a debt collector
money on a zombie debt to pay it, or settle it, or
anything like that, doesn’t necessarily bring anything
back to your credit report, that stuff’s gone. However, big caution, when
you make a commitment to pay something, say you wanna settle
a $10,000 that you haven’t been able to pay for ten years. And the only way you could do
it now, things have bounced back a little bit is to offer
them $1,000 a month and you pay five payments and
then you don’t pay another one. You just renewed a statute
of limitations with that debt collector for
them to actually sue you. Not a credit report, but now
they have access to the courts because you made a whole
new arrangement. So there’s some very nuanced
things that you want to be very careful about, and
they’re state-specific, when you engage with
a debt collector. And start to look at
reaffirming, reconfirming some kind of commitment to pay,
or an offer to pay something. And you do that in writing, that’s why I’m typically all
about negotiating on the phone. But hey we’ve got tons of videos
on our YouTube channel about how to negotiate with
debt collectors, and get that deal done and
committed to over the phone, and then documented afterwards. So look around,
search our YouTube channel for a lot of those helpful videos. This one’s about zombie debt. What do you gotta worry about? Stay away from zombies. See you on the next video. [MUSIC]

15 comments on “What is Zombie Debt and can it still affect you?”

  1. MrSavedby Grace says:

    Thanks for all your time and energy putting out all these videos. They're so helpful and informative. I just went belly-up and at first was really worried but now I see options and understand what I'm up against from my creditors. Thanks again.

  2. Johnny Ripped It says:

    Hi, I posted on another video of yours about my situation. I have a debt that is at least 9-10 years old, had not heard anything from debt collectors in many years. All of a sudden today I find my bank account with a Levy on it and found out a debt collector has taken the case to court without notifying me. They obviously won the case since I was not there to represent myself. This was way past the SOL in my state and it's not even on my credit report. What should I do to get my account/money back and do I have any course of action I can take against them for this?

  3. Zombie Debt says:

    Phantom Debt is another name. It means the same thing. 😆😆😆

  4. HanchoPOW says:

    What’s the statue of limitations for CA?

  5. Steven Thompson says:

    I just got an "offer" from Midland Credit Management, Inc for a "Zombie Debt" from a Citi Bank store account. I had medical problems and expenses that ate my budget up and I could not continue making payments. It has been several years since I made my last payment, and it surprised me when I got this "offer". I don't want to ignore the collection letter … but I'm not sure how to respond. Should I request Validation and Verification? Should I write a polite and professional letter that specifies that the account is S.O.L.? MCM has the reputation of metaphorically being a monstrosity combination of Hyena/Vulture/Bottom Feeder.

  6. dimeolas777 says:

    What if you have an old zombie. The collector doesnt send anything written. Might be calling but never leaves a message. Can tell them to cease contact but if they sure you anyway, illegally of course, is it then up to us to notify the judge this is zombie debt and illegal? Do they then dismiss the case? And what if they lie and say they tried to contact, sue, and never notify…can they get into your bank acct? When you find what theyve done can you ask the judge to dismiss the case afterwards?
    I had one company that we just sued and won and now my brother is getting calls while hes at work. he says theres no reason for anyone to call him so we think maybe it the debt resold again. If they called me I dont know it, no mail notice. If they sue me and I dont know it can I get the judge to dismiss it? Thank you.

  7. steven kraser says:

    Hey Michael, Nationwide Credit has been sending me a letter acting as AMEX, for a $1400 debt at least 10 years since last default. The account was closed by Amex and I did not pay back then. I replied via text to STOP the text messages, yet they are calling. Should I just ignore? The letters have already stated I’m not obligated to pay and my credit report cannot be harmed. Thank you.

  8. Mr T says:

    Hi Michael, there is a 4 year old debt with chase on my credit report for 12k. I live in WA and the SOL is 6 years here. However, I read on a website (link posted below) that Chase has a choice of law clause in its contract and that it declares Delaware as the governing state. Also, WA happens to be a choice of law state, so do you think Chase or a DB can sue me according to WA states SOL? One more thing, the account was opened in CO.


  9. Ass hole Name says:

    Dave ramsy says debt collectors are evil scum low life , I would agree on that cause they still try and collect on loans and credit card on which they charge usary interest , yet most people have paid in full the original amount borrowed in the way of interest charged , so yes these people are in my world scum …the courts and political arena support these criminal activities by permitting it to exist and flourish ..banks are being bailed out , and banksters making tens , hundreds of millions as the banks and companies lose money ..get my point ?

  10. SitDown Clowns says:

    Mr Bovee, I am in CA, and I received a notice of judgement for $58 "Postjudgement costs" via mail — "total of claimed costs." furhter down it references a Principal Remaining Due of $1895.05, which I think is a credit card I had 6-7 years ago, moved, couldn't pay, lost track of. Plaintiff is Portfolio Recovery Asscociates LLC. How can I be getting a judgement like this — it's only $58 I know but I don't want to trigger anything by paying it — but how can they get a judgement like this in this situation? Is there a way to stop it? Thanks for any insight/recommendations.

  11. Foothills Driver says:

    2 years ago I got the typical Zombie Debt collection phone call. They told me a process server was trying to find my house to serve me over a 10+ year old utility debt. They said that if made payment on this debt then it would all go way yadda yadda yadda. I was naive and over reacted and made a CC payment under duress. I quickly realized afterward that the debt was not mine and it was beyond the statute of limitations and was not responsible for the debt. I contacted my CC company and wrote them a letter about what happened and they reversed the charge. I never heard from the Zombie debt company again. Today another Zombie Debt company contacted me about the same alleged debt and employed similar techniques. Once again I was told they would be suing me for xxx$ on the the original debt of $xxx but if I paid today they would take 350$ blah blah blah. I asked if they would send me the original debt info, they said already did 45 days ago(which they never did I open all my mail!) and only after paying the 350$ would I get that info. They gave me 24 hrs to make a decision.
    My question- What should I do? Was any type of clock restarted when I made the CC payment to the original Zombie debt collector? If I did did that transfer to new scumbags? I never signed any paperwork though they did send me a signed email that said I was released from the debt which I never signed or sent back. As part of the original zombie debt collection phone call they did say they were recording the call if that means anything and in that conversation I did erroneously admit to the debt and I did initially make a payment to the Zombie Debt collector.
    Also the original debt fell off years ago, I have a good/great credit score.
    Thanks for your help and advice

  12. Melinda- Acosta Adventures says:

    I had a "mediator" call me yesterday saying I will be served with a court date within 48 hours for a bank account debt with US Bank that was in 2004 in California. I now live in Texas. Both states have a 4-year SOL. He said that since the bank continued to contact me by mail until 2015 , (which I never answered) they were still within the 4-years. It isn't on my credit report. Am I liable for this? Thank you for your time.

  13. Mary Preston says:

    What about payday loans

  14. Michael Lennon says:

    I have two 5th balance cards held by portfolio recovery. Both are well past the SOL in New Hampshire . I have sent them letters stating this. Would this be a good time to offer a pennies on the dollar amount to settle, or should I send a cease and disist ? I also have one from midland funding which is also very old

  15. RVinID says:

    Love the advice, but have you ever considered speaking INTO the microphone?

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