What is Zombie Debt?
If you feel like you’re being harassed by debt collectors, you may be right. The Fair Debt Collection Practices Act (FDCP) outlines what a debt collector can and cannot do to recover a debt. Of course, there’s a lot of money in collections and the law is not always accessible to the layperson. In this article, we’ll discuss some of the tactics debt collectors use to recover debt.
Zombie Debt
What is zombie debt? To understand this, you must have a basic understanding of debt collection law. Every time you incur a debt, the clock begins ticking. In Illinois, a creditor has five years to file a lawsuit against a debtor to recover the debt. Once the statute of limitations has expired on the debt, the debt is no longer collectible. But there is one caveat to that.
The clock does indeed begin ticking when you incur the debt, but the clock is reset every time you make a payment. That means that the five-year statutory limit resets every time a payment is made.
So what happens is that some collections agencies will purchase expired debt for pennies on the dollar and then attempt to coax unsuspecting debtors into making a small payment (of even a dollar). This causes the debt to become current and the clock begins counting down again.
How To Deal With a Zombie Debt Collector
Most folks don’t know what the statute of limitations is in their state, but you have a right to know that (it’s five years in Illinois) and you also have a right to know what debt the debt collector is inquiring about. If they refuse to provide you with that information, then you should simply hang up the phone. Eventually, they will need to tell you what specific debt they are collecting for.
If the debt is expired and you’re sick of the debt collector calling you, you can kindly tell them that you have no intention of making payment on expired debt, and that if they continue to contact you, you will have a lawyer intervene on your behalf.
But, if you do make a payment of even $1 dollar on the expired debt, the debt is rehabilitated and the collections agency can file a lawsuit against you to recover the debt.
Avoiding Creditor Lawsuits
Creditors can file lawsuits against a debtor to recover the debt. In most cases, the debtor never shows up to the hearing and a judgment is placed against the debtor. This allows the collections agency to place a lien on their real estate property, garnish their wages, or levy their bank account to recover the sum owed from the debtor.
It’s at this point that most folks begin talking to a bankruptcy attorney. We can help you start making moves to protect your assets from aggressive creditors, discharge the debts in bankruptcy, and start fresh without serious liabilities hanging over your head.
Talk to a Chicago Bankruptcy Attorney Today
If you’re in a difficult financial situation right now, you’re not alone. It is expected that millions of Americans will require bankruptcy relief as the pandemic goes on. Call the Chicago bankruptcy attorneys at Bentz Holguin Law Firm, LLC to learn more about how we can help.
https://bentzholguinlaw.com/understanding-illegal-debt-collection-practices/
