Tips to Defend Yourself Against Zombie Debt

Even when debt should be dead and gone, debt collectors may try to revive it. Zombie debt is debt you don’t legally need to pay. It’s dead. It’s gone. But someone is trying to bring it back to life and collect it from you. This term most often refers to old, unpaid debt that is past the statute of limitations. 

The statute of limitations is the amount of time a debt collector has to sue you for unpaid debt, and it varies depending on where you live, the type of debt, and the contract you signed. If you’re not careful, you could accidentally restart the clock on the statute of limitations by making a payment or acknowledging you owe it. 

Are you getting calls about old debt? This guide covers how to figure out if the debt is no longer valid, ways zombie debt can affect you, and how to get debt relief for legitimate debt.

What Is Zombie Debt?

Zombie debt is old debt that no longer needs to be paid but is still being pursued by debt collectors. Examples include settled debt, time-barred debt that’s past the statute of limitations, debt that has been written off, or even debt that belongs to someone else.

In all these examples, you’re not legally responsible for the zombie debt. But that often doesn’t stop debt collectors from contacting you and trying to get you to pay. In fact, the most common complaint to the Consumer Financial Protection Bureau (CFPB) is about attempts to collect a debt that isn’t owed by the consumer, which is one type of zombie debt.

The term “zombie debt” describes how the debt comes back from the dead. You may have forgotten about the debt or never known about it in the first place, until debt collectors “revive” it. This type of debt is also sometimes called phantom debt, because it’s the ghost of a past debt.

The names might be funny, but the situation isn’t. Nobody looks forward to talking with debt collectors to begin with, especially if it’s about a zombie debt. And if you make a payment toward a zombie debt, you could become legally responsible for it again.

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When Does Your Old Debt Die?

Old debt expires when the statute of limitations runs out and debt collectors can no longer sue you to collect the balance. 

To be clear, the debt is always yours. The only thing that dies is the creditor’s opportunity to win a judgment against you in court.

The time limit on suing you for a debt varies from state to state. It also depends on the type of debt.

Here are the basics on how a statute of limitations works:

• The time that a creditor has to collect a debt varies. It ranges from two to 20 years, but in most cases ranges from three to six years. 

• Certain debts may have a longer statute of limitations than other types of debt, like a vehicle loan versus credit card debt.

• The contract you sign with a creditor could include statute of limitations rules from an entirely different state than where you or your creditor are (this may appear in a “Choice of Laws” clause on your contract).

• The statute of limitations normally starts when you miss a payment. For example, if you miss a payment on January 1, 2025, and the statute of limitations is three years, then the statute of limitations runs out on January 1, 2028.

If a debt collector contacts you about an old debt, you could look through your original contract or agreement to see which state’s statute of limitations rules apply to the debt in question. After you review your contract and find out which statute of limitations you agreed to, a quick internet search could help you figure out if your old debt has expired.

If you no longer have your original contract, you could ask the debt collector to provide it when they validate the debt.

How Zombie Debt Collection Works

Debt collectors buy old debt for pennies on the dollar, and sometimes even less. Generally speaking, debt gets cheaper the older it is, because this makes it more difficult to collect. In some cases, like with zombie debt, the debt collector can’t take legal action to get the debtor to pay. But it can still contact the debtor and try to collect.

Collection agencies normally purchase packages of debt with a large number of past-due accounts. Recent debt tends to be more expensive because it’s easier to collect. The appeal with zombie debt is the low price–debt collectors don’t need to successfully collect on that much of the debt to make a profit.

For example, a debt collection agency might buy $1 million worth of old debt for $20,000. If the agency can recover 10% of that debt ($100,000), it’s up by $80,000 (minus its collection costs). Zombie debt and debt collection in general is a numbers game. If a long-forgotten zombie debt in your name ends up on a debt collector’s list, you could get an unexpected call.

So you know what to expect, here’s a typical collection process for zombie debt:

• A debt collector contacts you regarding an old debt.

• Within five days of that initial contact, the debt collector must provide you with validation information about your debt. Debt collectors can send validation information by mail or electronically.

• Once you get the debt validation information, you have up to 30 days to dispute the debt in writing. If you file a dispute, the debt collector must pause collection efforts until it has verified the debt and responded to you.

• If you don’t dispute the debt, the debt collector can continue trying to collect.

Failure to file a dispute doesn’t mean you’re now responsible for a debt. For example, if the debt is past the statute of limitations, you’re not legally responsible for it. That’s true whether you dispute the debt with the debt collector or not. But if you don’t dispute, then the debt collector can continue its collection attempts.

Types of Zombie Debt

When you’re familiar with the different kinds of zombie debt, you’ll have an easier time recognizing it. Here are the main types of zombie debt:

• Time-barred debt: When a debt is past the statute of limitations, you’re not legally required to pay it. Let’s say a debt collector contacts you about credit card debt from 10 years ago. You live in California, where there’s a four-year statute of limitations on credit card debt. You don’t need to pay, because it’s time-barred zombie debt.

• Settled debt: If you reach a debt settlement agreement, you pay a smaller amount than what you owe, and the debt is finished afterwards. New debt collectors still sometimes buy a “remaining balance” on settled debt, so watch out for this type of zombie debt if you complete a debt relief program.

• Discharged debt: You could have debt discharged in court as part of the bankruptcy process. Once debt is discharged, you don’t need to pay it—although that doesn’t always stop debt collectors from calling.

• Debt that has fallen off your credit report: Most debt comes off your credit report after seven years. Debt that isn’t on your credit report won’t hurt your credit score. However, a small number of states have a statute of limitations longer than seven years for unpaid debt. So even if debt has come off your credit, make sure to check the statute of limitations to see if you’re no longer legally responsible for it.

• Debt that isn’t yours: Zombie debt sometimes involves a case of mistaken identity. You get a call about a debt for somebody you don’t even know. Zombie debt can also be due to identity theft, like if a criminal applies for credit cards or loans in your name. If a debt is the result of identity theft, you can report it and get a recovery plan at IdentityTheft.gov.

With any type of debt, it’s important to keep accurate records. For example, if you discharge debt in bankruptcy, hang on to the debt discharge paperwork. If you settle a debt with a collection agency, get the agreement in writing, and keep a record of your payment.

Debt collectors sometimes go after old debt. When you have the necessary paperwork, you can prove that it’s zombie debt.

How Zombie Debt Can Affect Your Credit

While you’re not legally responsible for zombie debt, it could still impact your credit score. Most negative information can remain on your credit report for up to seven years, regardless of the statute of limitations. As long as an unpaid debt is on your credit report, it could lower your credit score.

The same is true with debt you discharge in bankruptcy. The debt can stay on your credit report for up to seven years. Also, bankruptcy can stay on your credit history for seven to 10 years, depending on the type of bankruptcy you file. Fortunately, the older the negative information is, the less it impacts your credit score.

Zombie debt can also be due to identity theft. To make sure identity theft isn’t affecting your credit, check your credit report at least once a year. You can get a free credit report once a week at AnnualCreditReport.com. If you find any mistakes or suspicious debts, contact the creditor and file a dispute online with the credit bureau that issued the credit report.

Tactics Zombie Debt Collectors Use

Zombie debt collectors don’t always play by the rules. Some of them use lies, threats, and other crooked tactics to convince people to pay up, even for debts they don’t legally owe anymore. Here’s a look at tactics that zombie debt collectors may use:

• Lying about the situation: A debt collector might lie and say your debt is still valid or tell you that you could go to jail if you don’t pay. Don’t assume a debt collector is telling you the truth. Some are more than happy to lie as part of a collection attempt.

• Impersonation: There have been cases of debt collectors pretending to be attorneys or well-known lenders to give themselves credibility.

• Threats: Debt collection agencies have threatened people with lawsuits, criminal charges, or wage garnishment.

• Harassment: To put more pressure on you, a debt collector could call often, call you when you’re at work, or contact your friends and family members.

• Asking for sensitive information: Debt collectors may ask for your Social Security number, bank account information, mother’s maiden name, or other private information. They sometimes try this because their files have little information on you. You don’t need to share anything with zombie debt collectors–it’s not your job to fill in the blanks for them.

Every debt collector wants to get money from the people they’re calling, but there are legal and illegal ways to do that. If a debt collector uses a high-pressure approach, wants you to pay right away, or withholds information about the debt, those are all signs of an illegitimate collection attempt. Reputable debt collectors have no problem sending a debt validation notice, and they don’t threaten or harass people.

Remember that you have rights under the Fair Debt Collection Practices Act (FDCPA). If you think a debt collector has violated the FDCPA, you can submit a complaint with the CFPB and contact your state’s attorney general.

Debt Collectors Can Still Chase a Dead Debt

Creditors and debt collectors may contact you about a time-barred debt. The legality of this depends on where you live. In some states, it’s illegal to pursue a debt that’s past the statute of limitations. In other states, debt collectors can still try to get you to pay, even if the debt is expired.

Whenever a debt collector contacts you, request written verification of the debt. You can also request that the debt collector not contact you anymore, especially if the statute of limitations has run out.

It’s illegal for a debt collector to sue you over a time-barred debt, but this could still happen—debt collectors don’t always have all the information on when the debt expired. In this situation, you can let the judge know that the debt is past the statute of limitations. Bring proof of your last payment toward the debt so the judge can verify how much time has passed since then. If you have questions about your legal options on an expired debt, contact a licensed legal professional in your area.

What Can Resurrect Zombie Debt?

If you acknowledge that a zombie debt is yours, you could reset the clock on the statute of limitations. The exact rules depend on where you live. Here’s what could be considered debt acknowledgement:

• Making a payment: A payment of any amount toward a debt could restart the statute of limitations. Debt collectors may try to convince you to make a small, token payment so that you’re on the hook for the debt again.

• Written acknowledgement: If you write in a letter or email that a debt is yours, the statute of limitations might restart.

• Verbal acknowledgement: In some cases, debt acknowledgement could be as simple as saying the debt is yours while on a recorded phone line.

Laws on debt acknowledgement vary from state to state. No matter where you live, be very careful when dealing with debt collectors. Always have the debt collector send proof of the debt first, and then check if it’s within the statute of limitations yourself. Don’t make a payment or admit anything, or you could find yourself back on the hook to pay a zombie debt.

Step-by-Step Guide to Dealing With Zombie Debt

If a debt collector has contacted you about zombie debt, here’s a four-step plan to protect yourself.

1. Request a debt validation letter

Debt collectors are technically supposed to send you a debt validation letter within five days of contacting you. But as we went over earlier, not every debt collector follows the rules.

When a debt collector first reaches out, ask for a debt validation letter. Don’t discuss the details of the debt at all or say that you recognize it. Once you’ve requested debt validation, you can end the call.

If you don’t get a debt validation letter, and the debt collector continues to contact you, explain that you’re not going to discuss anything until you have validation of the debt. You may also want to get the debt collector’s mailing address and send your own request for a debt validation letter in writing.

2. Look into the debt yourself

The debt validation letter should include:

• Your name and mailing address

• The collection agency’s name and mailing address

• The name of the original creditor on the debt

• The account number on the debt, if it has one

• An itemized balance on the debt, including fees and interest

Now that you have information on the debt, you can see if it’s valid. Specifically, check if the debt is actually yours and if it’s still a debt you legally owe, or if it has been settled through a debt relief program or gone past the statute of limitations.

3. Dispute invalid debts in writing

Debt validation notices must have a tear-off form you can send back to the debt collector to dispute the debt—it’s a rule set by the CFPB. The dispute process is fairly straightforward. You select the reason you’re disputing the debt and provide any additional information you feel is important.

You can also write your own dispute letter. You may need to do this if your debt validation notice doesn’t have a tear-off form.

To write your own dispute letter, provide your name and contact information. Include the information on the debt from the debt validation notice, but only what was in that notice. Don’t provide additional details about the debt. Explain that you don’t owe the debt and provide the reason why. For example, if the debt is past the statute of limitations or already settled, include that in your dispute letter.

4. Document all communications with collectors

Make copies of all letters and other documents you receive from debt collectors, as well as anything you send to them. Also, keep a record of all your communications. Every time a debt collector calls you, note the date, time, and what you discussed on the call.

A paper trail helps you keep your communications organized. You can refer back to your notes instead of relying on your memory. And if you need to file a complaint against the debt collector, you’ll have evidence to support your case.

When Professional Debt Help Makes Sense

Debts may be collectible for longer than you think. When a debt is still within the statute of limitations, a debt collector could take legal action against you.

If you’re going through a hardship, debt settlement is one way to deal with your debt. A professional debt relief company could negotiate with debt collectors for you. You could get free of debt faster and potentially settle it for less than what you currently owe.

Once you’ve settled your debt, you can also protect yourself from zombie debt. Debt collectors can’t come after you for settled debts. If they try, you’ll have proof that the debt is satisfied from your debt settlement agreement.

Editor’s Note: This post has been revised from the original to include updated and more specific information regarding the laws on expired debt. Please note we are not providing legal advice of any kind in this post. We encourage readers to seek an attorney’s help with legal questions or actions about their debt—zombie or otherwise.