Tips to Defend Yourself Against Zombie Debt

Tips to Defend Yourself Against Zombie Debt
BY John Russo
Oct 25, 2018
 - Updated 
Jun 14, 2024
Key Takeaways:
  • Debt on which the statute of limitations has run–also known as time-barred debt, zombie debt, or out-of-statute debt
  • While you may not need to pay on a zombie debt, debt collectors may try to get you to pay.
  • Learn about statute of limitations, time-barred debt, and how to avoid resetting the clock on zombie debt.

Here’s some good news if you have old, unpaid debt: the statute of limitations may have run out on your debt. However, while you don’t necessarily have to pay back debt on which the statute of limitations has run–also known as time-barred debt, zombie debt, or out-of-statute debt — that doesn’t mean debt collectors won’t try to get you to pay.

The statute of limitations puts a cap on the amount of time a debt collector has to sue you for your unpaid debt. But it can be hard to know if the statute of limitations on your old debt is truly expired, because different rules apply depending on the type of debt, the state you live in, and the contract you signed. The following tips could help you defend yourself if someone tries to bring your zombie debt back from the dead.

When does your debt “die”?

Determining if your old debt is expired under the statute of limitations can be tricky for the following reasons:

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

  • The time that a creditor has to collect a debt varies from state to state, generally ranging from 2 to 10 years.

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

If a debt collector contacts you about an old debt, it’s important to look through your contract and know which state’s statute of limitations rules apply to the debt in question. After reviewing your contract and finding out which statute of limitations you agreed to, a quick internet search could help you figure out if your old debt has expired.

Zombie debt can still haunt you

Wouldn’t it be great if old debts just died, once and for all? Unfortunately, they often don’t. Just because the statute of limitations is expired on your debt doesn’t mean that your debt is forgiven or considered to be paid off. Even if you don’t realize you have an expired debt, it could still have an impact on your credit profile.

In fact, having an out-of-statute debt could show up on your profile for up to 7 years or more. Additionally, zombie debt is sometimes the result of identity theft. To be safe and make sure you don’t have an old, unpaid debt, it’s a good idea to check your yearly free credit report so you can clear up any discrepancies or suspicious debts.

Creditors can still hunt dead debt

Just because you have an out-of-statute debt that you can’t be sued for doesn’t mean a debt collector won’t come looking for blood. Creditors and debt collectors may call you or even try to take you to court, for a time-barred debt.

If you get a court summons, you’ll need to prove to the court that the statute of limitation on your debt is expired. Otherwise, you may end up having to pay the debt, plus any late fees and accrued interest charges. If you have questions about your legal options on an expired debt, contact a licensed legal professional in your jurisdiction.

What can resurrect your zombie debt?

Even if a debt collector doesn’t take you to court, they could still contact you to try and get you to pay your old debt. If you’re ever contacted by a debt collector about your zombie debt, be careful. If you put even 1 cent towards your old debt voluntarily, or you admit to owing the debt, you could reset the clock on the statute of limitations and you may be on the hook to pay it off again.

Get help attacking your debt

One way to make sure that a valid debt stays in your past is by paying it off. But that doesn’t mean you have to pay on someone else’s terms. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt settlement program, which could help you resolve your debt faster and for less than you currently owe. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future. Find out if you qualify right now.

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 and encourage readers to seek an attorney’s help with legal questions or actions about their debt – zombie or otherwise.

We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during May 2024. The data uncovers various trends and statistics about people seeking debt help.

Credit utilization and debt relief

How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress.

We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 30% and 50%, high is between 50% and 100%, and very high is over 100%). In May 2024, people seeking debt relief had an average of 75% credit utilization. Here are some interesting numbers:

  • 47% of the people fell into the high utilization bucket.

  • 21% of people used 30% or less of their credit lines.

  • 20% had very high credit utilization.

You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.

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No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.

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