If you’re considering bankruptcy, you’re probably facing overwhelming debt. With all the calls and collection notices, you may have lost track of how much you owe and to whom. You’re just trying to stay above water and pay the bills that will keep the electricity on and food on the table.
What if some of those bills are notices for debt you no longer owe (or maybe never owed)? That’s commonly known as “zombie debt.” This can include:
- Debts already paid off or settled with the creditor for a lower amount
- Debts that are past the statute of limitations for collection (generally six years in Indiana)
- Debt errors (such as a debt that belongs to someone else, a duplicate charge or a payment that wasn’t posted)
Debt can go through multiple collection agencies over the years, so a collector may not realize the person they’re going after doesn’t owe the debt. Unfortunately, there are unethical collection agencies (known as “debt scavengers”) that continue collection activity even if they know the debt is past the statute of limitations or otherwise not owed.
While it can be difficult to take a hard look at your debt, it’s crucial to ensure that all of it is legitimate and that you deal with any “zombie debt” so that you have an accurate view of what you really owe.
How zombie debts can come back to life
By clearing this up, you can also avoid resetting the clock or “reanimating” zombie debt. This can happen if you make a payment on a debt that’s past the statute of limitations, for example. Making a payment that isn’t required can turn a zombie debt back into a real one.
Having a clear and accurate picture of your debt can help you determine whether bankruptcy or another solution is the best course of action. Getting early and experienced legal guidance is also a wise step towards a healthier financial future.
