All About Zombie Debts

“We’re talking about old debt. That’s why it’s called a zombie”. 

This quote comes from Christine Hines, the legislative director for the National Association of Consumer Advocates (Merle, 2019). This morning the Washington Post released the article,“Zombie Debt: How collectors will trick customers into reviving dead debts”, published by Renae Merle. The article details the prevalence of these zombie debts, debts owed by a consumer which the consumer may think is gone forever until it comes back to haunt them. Although the law varies from state to state, the majority finds that debt collection agencies lose the right to collect debt from consumers after a number of years (typically three to six). Many debt collection agencies have found a loophole in this law and have begun to use it to trick consumers into reviving these debts so they can legally sue. A common tactic is tricking the consumer into making a payment on the old debt. By making a payment the clock on the statute of limitations resets, and once again the debt collector can bring a lawsuit to collect the old debt.

“The efforts have contributed to the flood of debt-collection lawsuits clogging courts across the country, consumer advocates say. In New York City, the number of debt-collection lawsuits surpassed 100,000 last year, compared with 47,000 in 2016, according to data from the New Economy Project, an advocacy group.”

The article details the story of Terrie Raymer, a mother of five from Oklahoma. Following her divorce, Terrie was left with nearly $14,000 in credit card debt owed to Target. Her last payment was made in 2013 thus making the debt ineligible to be sued for. Terrie was relieved by this and began to rebuild her life. Then, in 2016 debt collection agency Rausch Sturm sued Terrie for the remaining debt. Through this process Rausch Sturm was able to acquire 19 cents from her bank account through garnishment. Rausch Sturm then argued this payment, although involuntary, restarted the clock and so they sued for the remaining $14,000 which she did not have. Once contacted by the Washington Post, Rausch Sturm dropped the case.

Another tactic debt collection companies use, is promising relief from debt collection phone calls if a payment is made. So someone may agree to make a minimal payment to stop the calls, only to then get a notice of a lawsuit for the entire debt now that the creditor can once again sue.

If you think you may have zombie debt, educate yourself. Consumers have protections in place under the law, but without understanding of these laws debt collectors can manipulate them into giving up these protections. If you find yourself in a situation which you may fear will lead to zombie debt, know your rights as a consumer. Make sure you have all of your debts in writing. If the debt is not yours, write to the collection agency to stop contacting you (Siddons, 2018). Know the statute of limitations for your residing state. In Massachusetts, the statute of limitations is six years for any debt.

If you have received a discharge order from filing bankruptcy this will protect you from debt collection attempts. If you are looking for bankruptcy help or assistance in navigating any part of the debt process, please reach out to us here at Massachusetts Debt Relief Foundation.

  • Merle, Renae. “Zombie debt: How collectors trick consumers into reviving dead debts”. Washington Post. 7 August 2019.

  • Siddons, Sarah. “How Zombie Debt Works”. 5 August 2018.