What is a Zombie Debt?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 08 February 2020
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A zombie debt is an old debt that a consumer believes has been addressed and a creditor attempts to collect. Most typically, this happens when a company buys up accounts owned by another company, often for very low prices, and then starts collecting on them. Much like the zombies of mythology, a zombie debt can pop up when least expected and can turn into a nuisance. While people attempt to resolve the debt for the second time, it can negatively impact credit reports.

A common example of a zombie debt is a balance on a credit card or loan that is written off during bankruptcy proceedings. The creditor records the debt as not collectible, and the debtor thinks that it has been put to rest. When another company buys old debt, it may attempt to collect on the debt, sometimes adding exorbitant interest charges to inflate the total amount owed.


Zombie debt can also occur when people are victims of fraud. They duly file a fraud report to indicate that debts are not theirs, the company takes note of this and records the debt as not collectible, and the debtor believes that the matter has been resolved. Sale of accounts in the future can create a situation in which a new creditor comes calling to demand payment on the debt. In other cases, people fully repay debt and have documentation to prove it and creditors attempt to collect again. Zombie debt can also include debts that have passed the statute of limitations.

People should be very careful when handling zombie debt. Some tricks used by companies to try and squeeze debtors include attempting to reclassify the debt as current to get it back on a credit report if it is old, making intimidating phone calls, and sending threatening letters. It can be helpful to consult a lawyer and people should be aware that there are laws protecting them from abuse and harassment from debt collectors. It is important to avoid saying anything that might be taken as an acknowledgment of responsibility for a debt as this can make the debtor liable for a debt that he or she really was not responsible for.

Keeping all documentation related to debts, even after the statute of limitations, is also recommended. This documentation can help resolve a dispute about a zombie debt quickly. While people are dealing with getting such debts removed from their credit reports, this documentation can also be provided to people asking to review a credit report so that they can be aware that some items on the credit report are disputed.



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