Your “Zombie Debt” Could Come Back to Haunt You

Lamine Zarrad
October 31, 2022
5 mins

Consumers beware of this creepy credit scare: some collectors are reviving dead debt, and the results can be gruesome.

When consumers have unpaid debts, collectors may attempt to recover the funds - sometimes resorting to legal action and wage garnishment. However, each state has laws that limit how much time a creditor has to sue a borrower after a balance becomes past due. These limits vary by state and by the type of debt in question.

Unfortunately, your debt could still come back to life after the statute of limitations has passed. But this Zombie Debt is not coming for your brains...it’s coming for your bank account. 

How can your debt rise from the dead?

Almost any kind of activity regarding an old collection, even against the consumer’s will, can reset the clock on the statute of limitations and leave you vulnerable to legal repercussions.

There are three ways this could happen: 

  • Making a payment: Making any form payment on an amount owed will revive an old debt. The payment doesn’t have to be made willingly, either - wage garnishments count too.
  • Agreeing to pay: If you acknowledge that the debt belongs to you and agree to pay, verbally or in writing, the statute of limitations will start over.
  • Using the line of credit: Making a charge on an old card or other line of credit will reset the statute of limitations. 

As you can imagine, collectors are eager to trick consumers into reanimating their old debt - and this trick is no treat. With the statute of limitations reset, collectors can once again take consumers to court and sue for repayment.

How can you prevent a Zombie Debt-pocalypse? 

Characters in The Walking Dead got creative with crossbows, katanas and even fire hoses to keep the undead at bay. Fortunately, you won’t need any weaponry to avoid Zombie Debt. Here are a few steps you can take to avoid a Zombie Debt attack: 

1. Know the “start date” of your statute of limitations

The statute of limitations begins on the date that your debt was first reported as delinquent. You can use your credit report to find your first reported delinquency on an account. This will help you avoid being tricked into reactivating debt that’s past the statute of limitations.

2. Don’t admit to the debt

You may need to be in contact with creditors or collectors to gather information about an old debt. In this case, you can ask questions about the amount of the debt, when it was acquired, etc - but don’t say anything that implies that you were the one to incur the debt or that you assume responsibility for it in any way. This admission makes it easier for the collector to take action.

3. Don’t give collectors your payment information

Debt collectors know all the loopholes, and are eager to exploit them. Some of those loopholes allow collectors to use credit, debit, or bank account information on file to process a payment at a later date without your explicit permission. To avoid this, you can make payments via checks or pre-loaded debit cards, and freeze or cancel any payment methods that you think may be accessed by collectors

Become financially fearless

Sure, Zombie Debt sounds spooky - but there’s no need to be frightened of your finances. With tools like StellarFi, you can build credit without adding debt. That means no more falling behind on payments - and no more zombies lurking in your future. 

Learn more about StellarFi’s credit builder.

The StellarFi blog is intended to serve as an informational resource. While StellarFi can help you build your credit, we do not provide financial, legal, or accounting advice. Please consult a trusted advisor for financial, legal, or accounting guidance as needed.

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On-time payment history can have a positive impact on your credit score. Nonpayment may negatively impact your credit score. StellarFinance, Inc. will report your on-time payments to Experian®, Equifax® and TransUnion®. Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.