When you pay off a credit card, car loan or personal loan, you may spend a moment rejoicing that this one burden is now out of your life. You certainly do not go back to that debt from time to time to make sure it remains paid off. In fact, as time passes, you may completely forget that you ever had the debt in the first place.
Like many in Tennessee and across the country who struggle to pay their debts, you may be surprised and upset to receive a letter or phone call from a creditor, saying you owe money for a debt you can't remember or one you were sure you had already paid. You may feel tempted to send a payment just to avoid dealing with it any longer. Before you do so, you may want to be sure you are not paying for zombie debt.
Know your rights
Zombie debt is old debt that has passed its statute of limitations. In other words, after a certain amount of time passes, the creditor no longer has the right to sue you for the amount due. However, some creditors purge their books by selling old debts to collectors for a fraction of the amount due. The collectors then contact the account holders to try to claim the old debt.
While collectors may not be able to sue you for the debt, they can still try to get you to pay. They may use very high-pressure tactics to compel you to send them any amount of money. Even if you send one dollar, the debt resurrects, and the creditor now has the right to sue for the full amount. A debt may be a zombie debt in these and other instances:
- You already settled these debts with a creditor, either by paying the full amount or a smaller amount the creditor agreed to accept.
- The amount in question was part of the debts a past bankruptcy had discharged.
- The debts are the result of an incident of identity theft or credit card fraud against you.
- The debts have passed the statute of limitations, which in Tennessee is usually six years.
- You do owe the amount, but you forgot about it.
Before you agree to paying any amount on any debt about which you are unsure, do some research. Check your own receipts and bank statements, and request a debt validation letter from the person trying to get you to pay. Knowing the law regarding zombie debt is important to avoid getting yourself into a legal issue. It may help to seek advice from an attorney who has experience with Tennessee debt and bankruptcy laws.