Commentary by Charles Feder, formely of Counsel to Ginsberg Law Offices
Zombie debts are old debts that come back to life.
Maybe when you think that old debt is dead because a creditor has charged it off , or a statute of limitations has passed, or even the debt has been discharged in bankruptcy. Then you get a call from a debt collector. Beware! There are several ways that debt collectors can trick or pressure you into bringing that old debt back to life.
There are a lot of “debt buyers” out there, and their tactics and scruples leave a lot to be desired. Debt buyers purchase old debts for pennies on the dollar from companies (such as credit card companies) that have charged off the debts on their books. The debt buyers then take very aggressive actions to collect, employing intimidating and often illegal tactics, such as falsely claiming that a lawsuit has been filed, or failing to identify themselves, even threatening bodily harm. A number of these companies have been fined by the Federal Trade Commission, but new ones seem to spring up like mushrooms after a rain, often involving the same people. It is a very profitable business.
Here are some common traps:
You think the matter is resolved because the credit card company charged off the debt. But that’s only a matter of the creditor’s bookkeeping. A debt buyer may still purchase the right to collect the debt.
You think that a statute of limitations has expired when it hasn’t. For example, here in Georgia actions on an “open account” must be brought within four years. However, Georgia courts have ruled that credit card agreements are “simple contracts,” subject to a six year statute.
Even more shocking, if you agree to make any payments on an old debt, the law may treat your agreement as a new promise to pay, with a new start to the period of limitation. If you agree in writing, you could even revive debts that were discharged in bankruptcy!
If you are contacted about an old debt, do not make any commitments or give out any information. Make a record of all contacts and consult with an attorney.