CHALLENGING ILLEGITIMATE DEBT

By: Lance T. Denha, Esq.

In this day and age of debt collection, there are many companies with an additional financial incentive beyond just turning a profit, these companies want to turn stomachs by collecting on older delinquent accounts. This “Zombie Debt, as its commonly referred to, is debt that is purchased by debt collectors hoping to intimidate consumers into paying off debt that is otherwise uncollectible due to the age of the debt or other issues. These debt collectors continue to haunt consumers despite their best efforts to stop them, hence the Zombie reference.

In today’s market, the business of collecting on old debts is ever increasing. Aggressive companies will often buy charged off accounts from original creditors for pennies on the dollar with the hope of generating more revenue than the cost of the debts. These companies will then begin the process of collection on these debts using any legal and sometimes illegal tactics. Below are some helpful hints to avoid the harassment of these debt collectors:

DEBT VALIDATION

The Fair Debt Collection Practices Act, FDCPA, gives you the right to verify debts from debt collectors. Within 35 days of being contacted by a debt collector, you can send a letter requesting the collector validate your debt. This validation needs to include documents, which at a minimum include account statements from the original creditor proving you owe the debt, the amount that you owe is valid, and the agency is still permitted to collect on the debt from you. Your request for validation must be made in writing. Once you receive the information about the debt, you’ll be able to determine if the statute of limitations has passed or if it’s even your debt at all. In some cases, Zombie Debt can be the result of identity theft, computer error, or a fraudulent attempt to get money from you for a debt that doesn’t exist.

STATUTE OF LIMITATIONS

The statute of limitations essentially defines how much time you can go without paying a debt before a collector’s right to collect through the court system expires. Even if the statute of limitation expired, agencies can still try to collect the debt; they just can’t do it through the court system. (If your debt was discharged through bankruptcy, they can’t attempt to collect it at all). If the collector files a lawsuit to collect a debt, be prepared to attend the hearing with evidence that the statute of limitations on the debt has indeed expired. The unlikelihood of collection on Zombie Debt warrants such a discount for Buyers of these hard to collect assets. The collection agency profits on the debtors they can convince to pay, even if those debtors aren’t legally required to pay. Many debt collection agencies motivate debtors to pay by using guilt, the debtor’s lack of knowledge on the debt or the law or by simply instilling fear. Of course, if the debt is beyond the state’s statute of limitations you are not required to pay anything.

CEASE AND DESIST

By sending a written cease and desist letter to the debt collector you can have the collector stop communicating with you about the debt altogether, regardless of the legitimacy of the debt. Such a letter should be sent via certified mail with return receipt requested. If the collector violates this request, you can take legal action.

NON-ACKNOWLEDGMENT OF DEBT

It is highly advisable to know the type of debt and the history of the debt these Zombie debt collectors are pursuing. By researching this debt and determining, among other things, if the statute of limitations has expired or if you previously filed for bankruptcy, you will be better be able to ascertain the legitimacy of the debt. Once determined, become proactive and prepare a certified letter detailing the debt in which these creditors are illegally attempting to collect. If these creditors attempt to take you to court, you have your defense readily available to present to the judge and may be awarded attorney fees.

All consumers should understand and realize that The Fair Debt Collection Practices Act (FDCPA) was designed to eliminate abusive, deceptive, and unfair debt collection practices. The federal law also protects reputable debt collectors from unfair competition and encourages consistent state action to protect consumers from abuses in debt collection. The FDCPA applies only to the collection of debt incurred by a consumer primarily for personal family or household purposes.