Debt can be scary and confusing, especially when you add in unknown terms. One term that’s been popping up lately is “zombie debt.” For many of you, that phrase brings to mind images of debts rising from the dead to haunt you. But what is zombie debt, and should you be worried? In this post, we’ll define zombie debt, debunk the myths, and tell you what to do if you find yourself with it.
What Is Zombie Debt?
Zombie debt is old, often charged off debts that come back to life after a long time of being dormant. In many cases, these debts are past the statute of limitations or have already been settled, but debt collectors or agencies will try to revive them in hopes of getting paid. The term “zombie” refers to the debt’s undead status—appearing when you thought it was dead.
Types of debt that can be considered zombie debt:
- Statute-barred debt: In the UK, most debts become “statute-barred” after 6 years. This means creditors can no longer take you to court to enforce the debt. But it doesn’t mean the debt is gone. It just means they can’t take legal action to collect it. Zombie debt collectors will still contact you, hoping you’ll pay voluntarily, not knowing the debt is statute-barred.
- Settled or charged off debt: This is when a debt has been settled or charged off by the original creditor. Sometimes collectors will collect on these debts even though you don’t owe them.
- Debt that’s not yours: Sometimes people are contacted about debts they don’t owe. This can be due to clerical errors or, in some cases, identity theft.
- Mutually settled debt: Sometimes a debt has been settled with the creditor and the debtor through a mutual agreement, e.g., after a dispute or payment plan. Despite this, you may still be contacted about the debt.
These are some of the scenarios where zombie debt might pop up, but why do these debts come back to life and how do collectors get involved?
Why Does Zombie Debt Resurface?
Zombie debt resurfaces because of debt purchasers—companies that buy old debts from original creditors for a fraction of the debt’s value. These companies specialise in chasing down debts that are unlikely to be paid, and that includes debts that are decades old. While this is legal, the ethics of it are often debated, especially when it comes to statute-barred or settled debts.
Debt buyers think consumers are unaware of their rights to zombie debt, so they will pursue these debts in hopes of getting some payment. In many cases, just acknowledging the debt or making a small payment will restart the clock on the statute of limitations and give the collector new legal rights to sue.
Common Myths About Zombie Debt
There are many myths and misconceptions about zombie debt. Let’s debunk some of the most common ones:
Myth 1: Zombie debt is illegal. It’s a common myth that zombie debt is illegal. While it may feel unethical to be chased for debts you thought were long gone, it’s not illegal to buy and collect on old debts. But collectors must follow strict legal guidelines, and there are protections for consumers.
Myth 2: If I ignore zombie debt, it will go away. Ignoring debt, even if it’s zombie debt, can cause problems down the line. While statute-barred debts can’t be enforced in court, a creditor can still contact you for payment. Always respond to communications from debt collectors to clarify the debt. In some cases, ignoring the debt could result in a mark on your credit file, even if the debt is unenforceable.
Myth 3: Paying any amount restarts the statute of limitations. While it’s true that paying any amount will restart the statute of limitations on some debts, that’s not always the case. The rules vary depending on the type of debt and where you live. In England and Wales, for example, the statute of limitations for most debts is 6 years from the date of your last payment or acknowledgement of the debt. If you pay after that period, you will indeed restart the clock.
Myth 4: Debt collectors have all the facts. They don’t. Debt buyers often rely on outdated or incomplete information from the original creditor. So they may contact you about a debt you’ve already paid or one that’s not yours. Always request verification of the debt before you enter into any repayment plan.
Zombie Debt
So what do you do if you’re contacted about a debt you think is zombie debt? Here’s what to do:
- Verify the debt: First verify the debt. Ask the collector for written proof that the debt is yours and still legally enforceable. If the debt is statute-barred or settled, tell the collector that.
- Don’t acknowledge the debt immediately: Acknowledging the debt can, in some cases, restart the statute of limitations. Be careful in your communications, and don’t make any payments or promises until you’ve had time to verify the debt’s validity.
- Seek advice: Organisations like Citizens Advice, StepChange, and National Debtline can offer free advice and help you understand your rights. They can also help you write to debt collectors or challenge invalid debts.
- Report harassment: If a debt collector is harassing you or using aggressive tactics, you can report them to the Financial Ombudsman Service or the Financial Conduct Authority (FCA). Debt collectors must follow specific rules when contacting consumers, and harassment is not allowed.
- Check your credit file: It’s important to check your credit file regularly to ensure no old or incorrect debts are being reported. If you find errors, you can dispute them with the credit reference agencies.
What Do We Buy Any Debts Do?
At We Buy Any Debts, we know how frustrating dealing with debt can be, especially zombie debt. That’s why we specialise in buying business debts, offering companies a quick and easy way to improve their cash flow. Unlike debt collectors, we focus on giving businesses relief from unpaid invoices through a hassle-free, transparent process.
We operate in a unique space; we buy debts directly and act as an intermediary for a discreet syndicate of investors, including some of the UK’s largest debt buyers. This allows us to offer highly competitive prices for your business’s bad debts while keeping the personal, family-focused service that sets us apart from the bigger corporate companies.
Why Choose We Buy Any Debts?
Here are just a few reasons to choose us if you want to get rid of your business’s bad debts:
- Instant cash flow: Convert your outstanding invoices into cash today and improve your business’s financial health.
- No long processes: Our process is quick and easy; no long-drawn-out debt collection.
- Free valuations: Get a free, no-obligation valuation of your debt so you can decide to sell.
- Personal service: We pride ourselves on a personal, family-focused service so your business gets the attention it deserves.
How It Works
Our process is simple:
- Enter debt details: Just enter the details of your outstanding debts.
- Get a valuation: We’ll assess your debts and offer a price.
- Sell: Once you agree to the terms, we’ll buy your debts and pay you cash quickly.
At We Buy Any Debts, we believe in giving businesses a way to get rid of their bad debts and improve their cash flow. Our hassle-free, no-risk transactions let you get on with growing your business without the burden of unpaid invoices hanging over you.
Conclusion
Zombie debt is a scary concept for many, but with the right knowledge and approach, it can be managed. Knowing what zombie debt is and your rights can help you deal with these situations with confidence. If you have zombie debt, make sure to verify the debt’s validity, seek professional advice, and take action where necessary to protect yourself.
For businesses, dealing with unpaid debts can be just as stressful. That’s where We Buy Any Debt comes in. By selling your bad debts to us, you can free up resources and focus on what really matters—growing your business. Get in touch today to find out how we can help you improve your cash flow and take control of your financial future.
