7 steps to take if chased by zombie debt

It could come by letter, phone call or even a notice of a court date: Zombie debt is chasing you. Old debt that refuses to die has earned that horrific name, and zombie debt is becoming epidemic. If you get a letter or phone call or even get sued over an old debt, what should you do? Here are some tips from consumer advocates:

1. Learn your rights. The first thing consumers should do when an old debt comes back to haunt them is to learn their rights, experts say. Start by visiting the FTC's guide to old debt and consumer rights. Then, look at your state's state statute of limitations, which can range from two to 15 years, according to the FTC. If the state statute of limitations on the debt has passed, the collector can not succesfully sue you over the debt -- assuming you show up and show it's too old. Morally, you may still owe the debt, but legally, the creditor's ability to collect has expired.

2. Proceed with caution. "Be very, very careful," says Ira Rheingold, executive director of the National Association of Consumer Advocates. Certain actions you might take, such as making a small payment on a debt or even promising to pay, can "re-age" a debt on which the state statute of limitations has passed, so the debt collector can then legally sue you.

3. Investigate the debt. When you are contacted about an old debt, there's a good chance that you might not recognize it because so many years have passed. For example, you might get a call from ABC Collections, which asserts AT&T was the original creditor. Bob Hobbs, deputy director of the National Consumer Law Center, says: "But what if you had five different accounts with AT&T over the years, and do you have your old phone records?" And, maybe you also had an AT&T credit card, he says. "That's one of the things about zombie debt -- it's hard to know what they're talking about." Or, the debt might not even be yours, experts say.

4. Check the amount. "You may owe something on a debt, but when the debt buyer gets to it, there are so many added fees, it might be hard to figure out how much you actually owe," Rheingold says, noting that it wouldn't be unusual for a consumer who remembers owing, say, $200, to get hit with a notice claiming they owe $1,500 or more.

5. Ask for verification and documentation. Experts recommend you write to the debt collector to ask for documentation of the debt. You should request the original contract, the date of the last payment, and the details of the last payment, Hobbs recommends. He says you also should ask for proof that the company owns the debt: "You want to make sure you are not dealing with a fraudulent debt buyer."

6. If you decide to pay, make an offer. If the debt is yours, the amount is correct and you've verified that the debt buyer owns it, you can offer to settle, Hobbs says. If, for example, you owe $500, you could call and offer to settle for $250 or less. "Most debt buyers would love to get a 50 percent lump sum payment, and they might accept 30 percent or 40 percent," Hobbs says.

7. If necessary, get a lawyer. If you are having trouble sorting out the situation or if you get sued, experts suggest consulting a consumer attorney who handles debt collection cases. To find one, check NACA's website, Hobbs recommends. The lawyer can defend you and help determine whether the company may have violated the FDCPA or other laws while trying to collect the debt, Rheingold says. 

See related: Zombie debt becomes big business, Debt collection verification sample letters

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Updated: 11-21-2017