Whether you are going through the bankruptcy process to achieve debt relief or your credit is in good standing, it’s possible for a previous delinquent account to suddenly come back to haunt you. This zombie debt can wreak havoc on your financial situation if you don’t properly handle a collection agency’s efforts to recover payment. Find out what you need to know to successfully resolve this situation below.

How Zombie Debt Works 

Typically, zombie debts are old financial obligations that the original creditor has written off as bad debt, but then later sells to a third-party collection agency at a substantial discount. Upon acquiring the debt, that agency will start collection activity to try to get the debtor to pay off the remaining balance.

Types of Debt Do Collectors Often Pursue

Zombie debts may be ones you’ve forgotten about or don’t recognize because they were never yours. In many cases, these debts date so far back that they are no longer legally enforceable because the statute of limitations has already passed on them or they’ve been forgiven through bankruptcy debt relief. It’s also common for collection agencies to purchase debts associated with identify theft. Under these circumstances, you would be absolved of all responsibility to pay. 

How to Protect Yourself 

If someone contacts you about paying a debt that is several years old or with which you aren’t familiar, take steps to protect yourself. First, limit all communication with the collection agency aside from sending a certified letter stating you dispute the debt. Next, request proof the debt belongs to you. All collection efforts must cease until you’ve received this information.

Never acknowledge the debt is yours, and don’t agree to make any payments. Doing so will make the debt valid again. If you recognize the financial obligation as one you’ve already received debt relief from, your bankruptcy attorney can send a letter on your behalf.

If you have questions about eliminating zombie debt, reach out to Greg Dunn, Bankruptcy and Debt Relief Attorney. He offers more than two decades of experience serving as Honolulu, HI’s premier bankruptcy attorney. His expertise in this area of law has proven instrumental in guiding thousands of clients to financial freedom. Visit him online for more information about his legal services, or call (808) 524-4529 to begin exploring your options for debt relief.