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What Is Zombie Debt?

Is there anything worse than debt? Yeah, in fact, there actually is. It’s a little something called zombie debt. And it’s back from the debt graveyard to haunt you with nightmares from the great beyond.

Think that sounds scary enough? Hold on to your britches. It gets worse—and we mean way worse. The worst part is that most of the time, that zombie debt isn’t even your debt (insert scary screams here).

What Is Zombie Debt?

Zombie debt is old debt (whether time-barred, past the statute of limitations, or already settled) that has come back to haunt you. And sometimes, that resurrected debt the collector is trying to pin on you isn’t even yours!

But beware: If you pay even one penny toward a debt that’s not yours, you’re basically telling the debt collectors that it is—making it even harder to dispute later. 

You’re probably thinking, there’s no way I would pay on a debt that isn’t mine. But you’d be surprised at how often this tactic really works. In fact, 49% of consumer complaints to the Consumer Finance Protection Bureau are about collectors trying to collect debt not owed by the consumer.1 Frustrating, right?

There are a few types of debt that are classified as zombie debt:

  • Settled debts. Whether through bankruptcy or another avenue, these are debts you and your lender have already agreed to bury for good.
  • Time-barred debts. If you borrowed money and didn’t repay it, collectors aren’t allowed to sue you after a period of time (this is called the statute of limitations). But if you make a payment, it will reset the clock!
  • Debts that have fallen off your credit report. After seven years, unpaid debts fall off your credit report. But debt collectors can still haunt you with them (after all, they’re still your debts—so pay them off!).
  • Debts that aren’t even yours. This means one thing: identity theft. Listen closely—you are not responsible for paying a debt that isn’t yours. 

Collectors get the wrong people all the time, but don't listen to their bluffs. You are not responsible for debt in any way if you never spent the money. Just remember—these people lie and break federal law on a daily basis to get their money, so if you don't owe, don't let them bully you into paying.

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But if you actually do owe on an old debt, it’s time to get on a written plan and pay it off using the debt snowball method. Work an extra job, eat rice and beans (and beans and rice), and don’t you dare step one foot into a restaurant unless you’re working there. Pay that thing off and rid yourself of these zombie debt collectors for good!

What Tactics Do Zombie Debt Collectors Use?

It shouldn’t surprise you that zombie debt collectors are sneaky. Think about it this way: They have one job—to chase down people who owe money. That’s it. And they’ll go to great lengths (and threats) to make sure they get the job done. 

The tactics they use aren’t always legal either. Here are a few of their favorite tricks:

Lying to you. Yeah—they’re not afraid to bend the truth. When it comes to chasing down your money, they’ll lie about anything. Some of their favorites include telling you that you owe more than you actually do, pretending to be someone they’re not, telling you that you’re going to jail, and more.

Threatening or harassing you. Zombie debt collectors may threaten to sue you, harass your friends or relatives, and even threaten you with violence. Even Dave and Sharon Ramsey had to deal with this. Debt collectors called Sharon and tried to make her feel guilty for being married to someone who owes so much money (just imagine how mad Dave was when he heard about that one).

Squeezing information out of you. You do not have to tell them anything—no matter how many times they ask. If someone calls asking for your Social Security number, current address, or what your best friend’s name is, keep your lips sealed! If you actually owe on a debt, your lender already has this information (well, maybe not your best friend’s name). 

We know that all sounds pretty ruthless. But when you know what to expect, you’ll know how to fend them off and when they’ve crossed the line. That’s when it’s time to file a complaint with the Consumer Finance Protection Bureau, the Federal Trade Commission, or your state’s attorney general. But more about that later.

How to Protect Yourself From Zombie Debt Collectors

1. Check your credit report once a year.

It's important to check your credit report for a few reasons. Obviously, you want it to be accurate, but if people are calling you and telling you to pay up, you might be a victim of identity theft. That means some stranger might be running up debt in your name! Make sure to pull your credit report once a year and check it for inaccuracies.

2. Know what you owe.

We can’t stress this enough. Knowing exactly how much debt you owe (and who you owe it to) is the best defense against zombie debt collectors. That way, if they come calling, you’ll know if they’re trying to make you pay for a debt you’ve already settled—or worse, a debt that was never yours. Keep payoff statements, contracts and records of payment on file for such a time as this.

3. Don’t share any information.

If a lender is calling, they should already have your information. If a zombie debt collector is calling, they’ll try to go fishing for more information. Don’t share anything with them, or they will use it against you!

4. Know your rights.

Believe it or not, collectors are supposed to follow the rules when it comes to collecting debt. Still, when it comes to collecting their money, they can get a little . . . intense. The Fair Debt Collection Practices Act protects you from nasty collectors when it comes to communication, harassment or threats, lying, and validation of your debt. If you think they’re stepping outside their bounds, let them know and then file a complaint with the Consumer Finance Protection Bureau.

5. Run from debt.

The best way to protect yourself from zombie debt (and debt collectors) is to run from debt. As fast as you possibly can. It might feel like an ugly break up, especially if you and debt have been walking hand in hand for more years than you can count. Believe us: That relationship is toxic and one-sided. Cut up your cards. Live on less than you make. And start chipping away at your debt, one payment at a time. It might take some time, but it’s worth it. Your freedom is worth it.

Want to learn more about paying off debt fast? Check out Financial Peace University (FPU). In this course, you’ll learn the proven plan to getting out of debt—and staying out of debt—for good.

What to Do if You’re Contacted About Zombie Debt

If you’re being contacted about debt that actually belongs to you, it’s time to pay it off and never look back! But if you’re being harassed over zombie debt that isn’t yours, send the agency a certified letter (return receipt requested) stating that the debt isn't yours and asking them to stop calling you. If they keep at it, you can file a complaint with the Federal Trade Commission (FTC) or your state attorney general’s office.

And if you think you might be the victim of identity theft, it’s time to freeze your credit, close any accounts that were opened in your name, place a fraud alert, and report it to the FTC.

It’s hard to predict when identity theft might happen to you. The best defense? Be prepared and protect yourself before it happens. Zander Insurance is the only company we recommend for identity theft protection. And get this . . . It’s totally affordable (starting at just $6.75 per month). Get these pros in your corner before the zombies come knocking!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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