We're way past Halloween, but as we head into the holidays, our bankruptcy lawyers in Louisville know that "zombie debts" have been known to haunt people all year around.
These are debts that essentially "come back from the dead" when a company buys them from the original creditor for pennies on the dollar. In fact, years may pass and you may have forgotten about it. So has the original creditor, who probably wrote it off as a loss. But that debt can be purchased many times over by numerous third-party buyers, meaning it will not go away.
What's important to understand is that you have to be careful how you proceed with these debts. In some cases, it's possible that you truly don't own it because court action must take place within a certain time frame of the debt being accrued. However, if you agree to make even a single, small payment on it, you could legally revive the debt and again become liable.
It's important to understand your rights. And if you have several of these older debts (and some newer ones too), it's time to reach out for some professional legal help.
If it seems that debt collectors are more aggressive than ever before, it's because they are. It used to be that large companies like credit card providers would try for a year or two to collect a debt. When they weren't successful, they would essentially give up. And then sometimes, debtors would pay a certain amount to have their credit cleared up.
But now, those old debts are being purchased in bulk by third-party buyers. It used to be that most of these debts were primarily credit card debt. They now come from a vast array of creditors, including hospitals, gyms, furniture stores, etc.
And they don't always fight fair.
The U.S. Department of Justice earlier this year took on Asset Acceptance, one of the largest debt-buying firms in the country, amid allegations that the company had run afoul of the Fair Debt Collection Practices Act and other laws. The company allegedly routinely lied to consumers and then gave false reports to credit reporting agencies, mucking up peoples' credit without cause. The company settled the suit out of court for $2.5 million.
Another part of the problem with these companies has to do with the way these companies purchase the debts. Often, they're only getting electronic records. So they might literally have your name, your Social Security number and what you owe. But they don't have any other paperwork. So first of all, you may not be receiving the notifications you are supposed to be getting before that information is reported to a credit bureau - as is required by federal law. And secondly, if you were to actually challenge that company in court, you my be successful in fighting that debt if they don't have any documentation of the original debt.
And finally, you should know that a number of debt buyers have been caught threatening to sue or actually suing someone long after the state's statute of limitations has run out on that debt. Third-party debt buyers do this at a much higher rate than original creditors, probably in large part due to the fact that they're getting the debt later in the process.
Still, these companies count on the fact that you won't show up to court. When that happens, you're likely to get a judgment against you, which can be very difficult to shake because at that point, the court can place liens on your property or garnish your paychecks in order to force you to pay.
If you need to speak to a Kentucky bankruptcy attorney, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.
Attack of the zombie debt, Nov. 12, 2012, By Allie Johnson, CreditCards.com
More Blog Entries:
Debt Collector Suing You? Call Our Louisville Bankruptcy Lawyers, Nov. 7, 2012, Louisville Bankruptcy Lawyer Blog