"Zombie" Debt Collectors

What to Do When the Zombie Debt Collector Calls

I have an unpaid student loan that is 19 yrs old. I was recently contacted by an anonymous collector stating," I owe the federal government". I replied I don't owe any thing!! and hung up.

This is so old it has been deleted from my credit record and I have excellent credit. I have no intention of paying this debt.

What legal right does this company have?

Isn’t there a statute of limitations?

After all I didn’t kill any one. 19 years is a long time to still be harassed!!

Colleen

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You are right that there is a statute of limitations on unpaid debt, usually four to six years, depending on the state.

If the creditor obtained a judgment against you, they usually have 25 – 30 years to collect on it. If you are sure there is no outstanding judgment against you, the debt cannot be legally collected.

There are firms referred to as “zombie bill collectors” that buy up old unpaid debt for pennies per hundreds of dollars of debt. They then try to collect. If they just get a few dollars, they make a profit.

There is some danger in dealing with these people. If you say the wrong thing, they may try to prove that you reaffirmed the debt and then sue you for the entire balance and use your admission to effect your credit report. Your response was a good one. If contacted again, repeat it.

Check your credit report periodically and see that this collector does nothing to harm it. For information on how to get your credit report for free read Your Credit Report.

Also read Bill Collectors to learn how to deal with bill collectors and what damages you can collect if the collection firm violates the law.

If this firm continues to harass you, you would be better off to hire a lawyer to get it off your back.

The US Supreme Court Steps In

There have been new developments regarding unpaid federally guaranteed student loans. The US Supreme Court recently ruled that money owed for unpaid student loans can be withheld from Social Security payments when you retire. The court refused to recognize a hardship argument in defense.

I have not read the decision and I don't know if a judgment has to be obtained against the student loan debtor before this becomes applicable.

However, in the October 2005 Bankruptcy Reform Act, Congress made it very clear that it is against public policy to discharge student loans in bankruptcy and extended the same provisions to private student loans, even though there was no public policy reason to do so.

If you are approaching retirement and are counting on your full Social Security benefits, you might want to consult an attorney and, if he feels this ruling will affect you, have him try to negotiate a settlement of your unpaid student loans, even if the statute of limitations has run.

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