Difficulties with bad credit repair can happen to anyone – often it starts with a phone call out of the blue demanding payment for a debt that is 10 years old or more. Sometimes, the debt in question doesn’t even belong to you, but may be that of a deceased relative.
The voice on the other end assures you that you are responsible for the debt and urges you to “make payment arrangements” right now. Or maybe they try to play on your good conscience – telling you that it’s “the right thing to do”.
Before you agree to anything, you have to stop and think: the collection agencies don’t care about your bad credit repair efforts. They just want to get as much money as possible, whether it’s “the right thing to do” or not! Don’t agree to any payments and don’t accept responsibility for a bill that you don’t recognize, especially if you don’t receive written notification. And definitely don’t let the debt collection agencies force you into an agreement based on feelings of guilt or remorse.
Bad Credit Repair and Zombie Debt
Zombie debt can take on many forms, the most common ones are:
- Time-Barred Debt
- Debt past the SOL for reporting
- Debt that belonged to deceased relatives (often a spouse)
Bad Credit Repair: Time-barred debt
Time-barred debt is debt that a creditor cannot legally sue to collect. If they attempt to do so, you have a built-in defense and the case will be dismissed. The most common creditors that attempt to collect on time-barred debts are third-party debt collection agencies.
These agencies purchase debt from a variety of companies – utilities, cell phone companies, medical bills, credit card debt – you name it, there is probably a debt collection agency that has purchased it.
They buy these debts from the original creditor (often for pennies on the dollar) and then attempt to recoup their initial purchase plus make a hefty profit based on the premise that some consumers will pay off this old debt, even though they can’t be sued.
Your best defense against having your bad credit repair derailed by this type of zombie debt is simple vigilance – don’t agree to pay any bill over the phone, and always request verification of the debt within 30 days of receiving a notice in the mail. If the debt is time-barred in your state and they can’t sue you to collect, sending a letter telling them to cease all communications with you should end the harassment for good.
Bad Credit Repair: Debt that is past the SOL
Debt past the SOL for reporting is almost always time-barred (but you should check your state laws to confirm). The difference between the debt that is past the statute of limitations for reporting and debt that is time-barred is simple:
Time-barred debt is debt that you cannot be sued for in order to collect. Debt past the statute of limitations, SOL, is debt that is so old that it cannot legally be included on your credit report. If the debt is past the SOL for reporting, you can write to the credit bureaus – you’ll have to write to each one separately – to request that the debt listed be removed from your file. This should help with your bad credit repair as older collections can still cause a dip in your credit scores.
Time-barred debt vs. Debt past SOL for reporting
Bad Credit Repair: Debt that Belonged to Deceased Relatives
Bill collectors who go after this kind of debt know that they are being insensitive – you may get notices from loan companies and other creditors that contain a “final bill”. While this type of debt may require legal advice to settle if you are dealing with your own bad credit repair issues, bill collectors typically cannot expect payment from relatives of the deceased. (One major exception to this is joint accounts that belong to the living relative as well as the deceased.)
Mailing or faxing a copy of the death certificate is often enough to get rid of these parasites, but sometimes they persist and try to play on feelings of guilt or obligation. As with debt that is time-barred, you can request in writing that these companies do not contact you again and that should end the harassment.
Do not accept responsibility for any debt that is not yours. These bill collectors may attempt to transfer the account to your name, thereby making you responsible, and giving them leverage if you should later decide that you don’t want to pay off the debt.
While bad credit repair can be difficult, giving in to zombie debt will only make it that much worse. Stay clear of zombie debt and work on getting your financial house in order without the added burden of debt that you do not have to pay.