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What to do about 'zombie debt'

BBB: Watch out for job scams
Posted at 9:15 AM, Nov 02, 2020
and last updated 2020-11-02 11:28:19-05

IDAHO — Do you have all of your past debts paid off? Even if you do, the Better Business Bureau warns that 'zombie debt' could haunt you.

Rebecca Barr with BBB says zombie debt is old debt that’s been resurrected by collectors and pinned back on you—whether it’s yours or not. These debts have usually fallen off your credit report, you no longer owe them, or they're expired, but a debt collector has revived it and is asking you to pay. The sources of these debts vary from unpaid debts you may have forgotten about, debts already settled with creditors, fraudulent charges from identity theft, or even fake debts as a part of a scam.

So how do these debts come back from the dead? Barr explains that creditors often remove old debt from their ledgers and sell it to third-party collectors. In some cases, the debts are legitimate, but in others, they aren’t. When debts are sold and re-sold, the records may be incomplete or inaccurate.

Barr says think of it as a game of “telephone.” The more times debt is passed around, the more chances that the related information is wrong. If you acknowledge the debt or start making payments, you may be agreeing the debt is yours. Do your research and get written proof of the debt. Be aware that debt collectors may use threatening tactics to get you to act quickly and pay.

There are some ways to protect yourself from zombie debt, including:

· Check your credit report often. Barr suggests at least once a year or more. Equifax, Experian, and TransUnion are now offering free weekly online reports through April 2021. Check it for inaccuracies and for accounts that may be opened in your name.

· Know what you owe. Keep tabs on all debts that you owe, including balances and payments. Keep pay-off statements, contracts, and records of payment on file for such a time as this.

· Know your rights. The Fair Debt Collection Practices Act protects you from ruthless collectors when it comes to communication, harassment or threats, lying, and validation of your debt. If you think they’re stepping outside their bounds, file a complaint with the Consumer Finance Protection Bureau.

You can always learn more about protecting your identity on the BBB website.