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Collections agencies pursuing consumers for zombie debts

As credit and debt become larger parts of American life, the debt collection industry has spawned a new term, zombie debt. Some Florida residents may already be familiar with the term, which refers to dormant bills brought back to life, so to speak, by debt collection companies. In some cases, zombie debt may arise from nowhere, as it is not uncommon for collections agencies to hound consumers for debts they never incurred in the first place.

It's an uncomfortable, anxiety-inducing circumstance. A debt that has been settled or otherwise discharged is cleared off of the books of the original creditor, who sells it to a third-party debt collector, who then begins efforts to collect the money from a person who thought the debt was a thing of the past. Zombie debt most commonly comes from debts a person owes but has forgotten, debts that have been previously settled, debts that have been discharged in bankruptcy, debts for which the statute of limitations has expired and fraudulent debts resulting from identity theft.

One of the primary dangers of zombie debt, according to an attorney with the Federal Trade Commission, is simply its age. In combination with the aggressive tactics often employed by debt collectors, the age of the debt may make its validity difficult to verify. But consumers should be wary of making a payment on an old debt as doing so could reset the applicable statute of limitations.

Those who are struggling with creditor calls and collections agencies may have options when it comes to debt relief. An attorney with experience in bankruptcy law may be able to suggest strategies to consolidate or reduce certain debts. An attorney may be able to advise individuals regarding personal bankruptcy under Chapter 7 or Chapter 13 or may help to negotiate a settlement with creditors.

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