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Putting phantom debt to rest

Many people living in Florida have to deal with bill collectors. In some cases, the collectors try to collect a legitimate debt in an ethical manner. In other cases, however, the person being contacted has already paid or never owed the debt in the first place. In these situations, the collection efforts are often the result of bookkeeping errors or mistaken identity. However, creditor harassment sometimes persists.

The problem of what is called “zombie” or “phantom” debt is often the result of a practice known as debt buying. Original creditors who no longer want to be burdened with attempting to collect money owed may sell a debt directly to a collection agency for a fraction of its value. The collection agency then attempts to collect the full amount of the debt. If that collection agency fails, it may resell the debt to yet another agency.

While this practice is legal, the fact that the debt changes hands so many times means that it can be difficult to track its legitimacy. In some cases, “debts” have been sold to bill collectors even though the debt has been paid off, settled or were discharged in Chapter 7 or Chapter 13 bankruptcy.

Financial professionals advise consumers to be wary of any call claiming to come from a bill collector. Under federal law, consumers have a right to request, in writing, documentation of the debt from the collector. The consumer may also provide proof of debt payment or discharge. If the collector cannot prove that the debt is legitimate, it must end collection efforts.

Individuals and families who are concerned about debt-related issues could speak with a bankruptcy lawyer. Legal counsel may review the client’s situation and make suggestions regarding debt relief.

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