What is Zombie debt and how does it relate to Debt Collectors and their tactics

One of the things people who have been victims of identity theft report to me frequently is that they have done everything humanly possible to educate debt collectors that the debt is not theirs, yet they continue to harass them repeatedly. They also report that just when they think they have convinced them that the debt is not theirs, they change debt collection companies and it starts over again.

Why does this occur? This occurs because the debt continues to get sold. After some period of time, the original creditor (i.e. credit card company) sells the debt to an entity who purchases that debt for some percentage on the dollar. The age of the debt determines how much it sells for on the secondary market. Often the debt of any number of people is consolidated and sold in blocks.

Depending on the age of the debt, it is possible that it could be sold for pennies on the dollar. Extremely old debt is often referred to in the industry as Zombie debt. Like the name implies, it is debt that, despite the age, refuses to die. Much of this debt is debt that has been written off, discharged in bankruptcy, or resulted from identity theft.

Claims by consumers of illegal tactics by debt collectors have skyrocked. In 2008, consumers complained about debt collectors more than any other industry. The FTC recently issued a report saying that the debt collection system needs reform to insure that collectors are going after the right people for the right amounts of money.

To date, collectors are fighting state officials investigations into their actions.