Zombie debts, also referred to as phantom debts, are old debts you’ve all but forgotten about. They probably already fell off your credit report, so you thought they were gone for good. But one day, out of the blue, a debt collector comes calling — they’ve resurrected your forgotten debt.


What should you do? Do you pay it? Do you ignore it and hope it’ll go away? Read on to learn what you need to know about phantom debt and how you should handle it.


How Zombie Debt Works

Zombie debt typically refers to debts that are three or more years old. 


They’re often past the statute of limitations for collection and although the debts are typically  too old for anyone to pursue legal action on them, a debt collector decides to revive them and come after the debtor for payment. In some cases, though, zombie debts are still within the statute of limitations and if that’s true, the collector can still sue the debtor to collect.


Some of the most common types of zombie debt include:


●        Debt you already settled with a creditor

●        Debts wiped out when a bankruptcy case was discharged

●        Fake debts that fraudulent collectors claim you owe

●        Debts you didn’t pay in full but forgot about


It’s important to note that zombie debts don’t always belong to the person who’s getting calls from collection agencies. Phantom debts can arise from identity theft and fraudulent charges, computer errors, or they may even belong to another individual.

Statute of Limitations & Debt Collection

In most states, the statute of limitations on how long a debt collector can pursue legal action on an unpaid debt is three to six years. The Minnesota statutes of limitations on various types of debt are as follows:


●        Credit card debt: 6 years

●        Auto loan debt: 4 years

●        Medical debt: 6 years

●        Mortgage debt: 6 years

●        State tax debt: 5 years (if a lien is filed by the 5-year mark, it remains in place for 10 years)


Do You Have to Pay Zombie Debts?

If the statute of limitations has passed on the debt, it’s considered uncollectible. So even if you still technically owe money on the debt, you have no legal obligation to pay it. Why would someone contact you about paying up then?


Certain companies buy up uncollectible debts with the understanding that many people aren’t aware they’re no longer legally required to pay said debts. These companies contact debtors and often use aggressive language and tactics to trick the debtor into making a payment. If you’re ever contacted by a collector seeking payment on a zombie debt, paying on the debt can hurt you.


When you make a payment on an uncollectible (zombie) debt, you immediately restart the statute of limitations on that debt. It’ll also go back on your credit report even though it probably already fell off. And here’s the worst part: By paying, you enable the debt collector to take you to court for the debt.


Depending on your financial situation and the size of the debt you owe, this could put you in a precarious position. If the debt is large enough and you can’t pay it, but the collector pursues legal action against you, this may force you to consider filing for Chapter 7 or Chapter 13 bankruptcy.


What Should You Do If a Collector Contacts You About Zombie Debts?

The Fair Debt Collection Practices Act (FDCPA) limits what third-party debt collectors can do to attempt to collect on debts. While they are allowed to contact you, there are several things they’re not allowed to do, and in many cases, the tactics they use to trick debtors into paying are illegal.


If a debt collector calls, it’s in your best interest to avoid speaking to them on the phone. Do not agree to pay on a debt that you’re unsure about or even acknowledge that it’s yours. The FDCPA requires collectors to provide written proof validating that the debt is yours, as well as written notification of any judgement against you. You’ll need to ask for written proof within 35 days of the collector’s initial contact.


When you have written notice, you can then determine if the debt does indeed belong to you and how you should handle it. If you need help determining how to handle a sizeable zombie debt that you actually owe on, it may be in your best interest to contact a bankruptcy attorney for advice.


Not Sure How to Handle Your Zombie Debt? Speak to a Twin Cities Bankruptcy Attorney Today

If you recently learned of a large zombie debt you still owe on and can’t pay, filing for bankruptcy may be in your best interest. To learn more about your options, schedule a consultation with Ron Lundquist, Attorney at Law today. Call the office at 651-454-0007 or send a message with your information, and we’ll be in touch.