If you're hearing from zombie debt collectors who are trying to resurrect an old debt from many years ago, it can be pretty frightening. But before you let those old debts give you nightmares, understand you do have rights that can help you resolve your debts.
“Zombie debts” debts refer to old debts. A more technical term would be "time-barred" debts, or debts that are outside the statute of limitations. In other words, if a creditor or collector tried to sue you to collect an debt that was time-barred, you could go to court, raise the statute of limitations as a defense, and the party suing you would lose.
Each state sets it own statute of limitations for debts. In most states, and for most types of debts, the statute of limitations ranges from three to six years, though some are longer.
There is a common misconception that zombie debt collectors cannot try to collect a debt that is outside the statute of limitations. But most court cases addressing this issue have ruled that debt collectors are not prohibited from trying to collect time-barred debts, as long as they do not sue or threaten to sue you for the debt. Because many consumers don’t know their rights, however, they panic when they are sued for a debt – even if it is a time-barred debt, and pay the debt rather than fighting back.
If a debt collector sues you to collect a debt that is outside the statute of limitations, you can get the lawsuit dismissed by letting the judge know the debt is too old.
A federal law, the Fair Debt Collection Practices Act (FDCPA), imposes limitations on how debt collectors can collect debts - and that includes zombie debt collectors. Under the FDCPA, a “debt collector” is any person or organization that regularly collects debts owed to others – including lawyers or law firms that collect debts for others on a regular basis. A creditor collecting a debt directly from a borrower is not considered a debt collector for purposes of the FDCPA, though state law may provide additional protection. (Most time-barred debts are handled by outside collection agencies, however. It’s unusual for a creditor to hold onto a debt that long.)
Because the FDCPA prohibits debt collectors from engaging in any unfair, deceptive, or abusive practices when they collect debts, a firm that threatens to sue a consumer for a time-barred debt could be breaking that law.
What should you do if a zombie debt collector contacts you about a time-barred debt? The first thing you should do is ask for written verification of the debt. This will give you time to research the statute of limitations for your state, and help you decide how to deal with the debt.
If you owe a debt, and you can afford to pay it, then you should. It’s important to honor the agreements you have made with creditors. But if you cannot afford the debt, you don’t believe you owe the debt, or you believe the amount is wrong, you have important consumer rights under the federal Fair Debt Collection Practices Act.
If you are confident the statute of limitations has expired for a debt, you have the right to send the debt collector a letter asking them to stop contacting you. Once they receive your letter, they cannot contact you again except to inform you of any legal action they will take against you. If you state in that letter that you believe the statute of limitations has expired, they may decide not to pursue the debt. Still, keep a copy of your correspondence indefinitely. It’s not unusual for a collector to sell an old debt to another collection agency!
If you believe a debt collector violated the law, you have the right to sue in a state or federal court within a year from the date the law was violated. If you win, you may recover money for the damages you suffered, plus an additional amount up to $1,000. You also may recover court costs and attorney’s fees. That’s why it is a good idea to understand your rights under the federal Fair Debt Collection Practices Act, and to contact an attorney for help if you believe your rights have been violated. You also may want to report problems with debt collectors to your State Attorney General and to the Federal Trade Commission.