Zombie Debt

[Ted C]

Tennessean article

If you receive a call about an old debt or notice of a debt-related suit, don't ignore it or try to deal with it alone, said David Tarpley, managing attorney in the housing and consumer section of the Legal Aid Society of Middle Tennessee and the Cumberlands.

"You may find yourself wrestling with zombie debt," Tarpley said.

A cottage industry of debt buyers has emerged that has a particular interest in 6-year-old debt, Tarpley said. These debt collectors purchase debt from credit card issuers for a fraction of what is owed and then try to collect the full amount.

But if the debt is already 6 years old, federal and state law requires credit-reporting agencies to purge the negative information in one to three more years (depending on the state in which you live).

So, in order to collect some or all of the original debt, some debt buyers resort to high-pressure tactics, suits and threats of suits. A suit related to a debt that is six or more years old is barred by federal and state law, Tarpley said.

However, if a person makes any payment on this type of old debt, he may inadvertently "raise the debt from the dead," making it subject to a debt collection suit again, Tarpley said.

"Get a lawyer, or at least legal advice," said Tarpley. "You don't want to go it alone."

The prophesied Zombie Apocalypse is upon us. Whodathunk?

[Solauren]

This is a very... sneaky tactic.

However, I have to wonder what you can do if someone goes 'We will take you to court', over something that is not actually actionable in court.

That's almost fraud, isn't it?

[Ted C]

This is a very... sneaky tactic.

However, I have to wonder what you can do if someone goes 'We will take you to court', over something that is not actually actionable in court.

That's almost fraud, isn't it?

Well, if I'm reading the article right, the debt is actionable in court until the full six years have passed (more in some states, apparently). If they can get you to make even one payment before the deadline, they reset the whole "statute of limitations".

And if they think the return is worth the cost, they can actually sue for the amount owed if they file the suit in time.

[Rahvin]

This is a very... sneaky tactic.

However, I have to wonder what you can do if someone goes 'We will take you to court', over something that is not actually actionable in court.

That's almost fraud, isn't it?

Some debt collectors will actually threaten to call the police and charge the debtor with theft to strongarm them into payment.

It's completely illegal (and I''d be that knowingly threatening legal action that is not actually legal to pursue would also be illegal), but that doesn't stop some companies from doing it. After all, the only way they get in trouble is if the debtor understands their rights and reports it. Typically the debtor is simply ignorant of their rights and afraid, and so the tactic works.

[Rahvin]

This is a very... sneaky tactic.

However, I have to wonder what you can do if someone goes 'We will take you to court', over something that is not actually actionable in court.

That's almost fraud, isn't it?

Well, if I'm reading the article right, the debt is actionable in court until the full six years have passed (more in some states, apparently). If they can get you to make even one payment before the deadline, they reset the whole "statute of limitations".

And if they think the return is worth the cost, they can actually sue for the amount owed if they file the suit in time.

Worse. If I'm understanding correctly, if they can convince you to make even one payment even after the time limit has expired, they can count it as a new debt.

I know of some agencies that are now sending out "credit cards" to debtors - basically, they offer you a new credit card with a "reduced" amount of your debt applied to it (which they of course raise nearly back to the full amount through activation fees and such) in an offer to clear up the old debt.

If you accept the offer, you now have a credit card with your debt applied that is now earning interest. It not only restarts the time limit, it adds interest, late payment fees, and the simple negative effects of giving a person with poor credit a credit card to the equation.

[Pelranius]

Well, in this case, we could actually get the tort attorneys to do something useful and sue these zombie loansharks after enough of the carnage has settled.

[The Yosemite Bear]

So why did I read this at first and think it was people trying to collect for forced servatude that their undead ancestors had to endure?

I mean the neurotoxin turning someone unto a drugged "Zombie" is fairly well established, americans have a tendancy to sue for everything. Why not Hoodoo Zombie Restitution suits?

[Darth Wong]

I'm having trouble feeling a lot of sympathy for people who are walking around with unpaid debts and ignoring them because they've gone unpaid for more than 6 years. Fuck 'em all; I hope these collection agencies make their lives miserable.

[The Guid]

Not all debt is there for reasons of a spendthrift attitude. For instance, there are those who may have accumulated debt for health reasons, or there are cases, from those who I know, who, as children, accumulated debt paying their parents expsenses. Sure, its not a long term great plan, but it is human and understandable.

[Darth Wong]

Not all debt is there for reasons of a spendthrift attitude. For instance, there are those who may have accumulated debt for health reasons, or there are cases, from those who I know, who, as children, accumulated debt paying their parents expsenses. Sure, its not a long term great plan, but it is human and understandable.

I know that medical expenses bankrupt a lot of people, but the fact is that most of the credit in the country goes toward other things, like a person making only $25000/yr trying to buy a fully detached house in a good neighbourhood while also owning two cars. That's how this ridiculous sub-prime explosion took place: peoples' medical expenses didn't skyrocket in the last 10 years, but their discretionary spending did.

[Rahvin]

Not all debt is there for reasons of a spendthrift attitude. For instance, there are those who may have accumulated debt for health reasons, or there are cases, from those who I know, who, as children, accumulated debt paying their parents expsenses. Sure, its not a long term great plan, but it is human and understandable.

I know that medical expenses bankrupt a lot of people, but the fact is that most of the credit in the country goes toward other things, like a person making only $25000/yr trying to buy a fully detached house in a good neighbourhood while also owning two cars. That's how this ridiculous sub-prime explosion took place: peoples' medical expenses didn't skyrocket in the last 10 years, but their discretionary spending did.

Those aren't the type of situations that would eb relevant to the circumstances described in this thread. When a mortgage defaults, the lender doesn't worry about the 6-year time limit for lawsuits - they just begin foreclosure proceedings.

Remember, if a company has already waited six years without filing a lawsuit to get their money, it's unlikely that a lawsuit is actually financially viable. At the same time, if they let the time limit expire, the debt will be removed from the debtor's credit report and they'll no longer have any leverage to get the debt paid - they might as well write it off.

Debts of this sort should be relatively small - unpaid utility bills, small credit cards, and the like. Not amounts worth pursuing in court.

And while I understand your lack of sympathy towards those who make what are obviously piss-poor financial decisions, I still wouldn;t condone the blatant scaremongering that the collection agencies are undertaking to get the debts paid. When they threaten to call the cops, for instance, they are outright breaking the law. I'm not certain about threatening to file a lawsuit that they fully know they cannot legally file, but at the very least such dishonesty constitutes a dick move.

[Glocksman]

This is a very... sneaky tactic.

However, I have to wonder what you can do if someone goes 'We will take you to court', over something that is not actually actionable in court.

That's almost fraud, isn't it?

Some debt collectors will actually threaten to call the police and charge the debtor with theft to strongarm them into payment.

It's completely illegal (and I''d be that knowingly threatening legal action that is not actually legal to pursue would also be illegal), but that doesn't stop some companies from doing it. After all, the only way they get in trouble is if the debtor understands their rights and reports it. Typically the debtor is simply ignorant of their rights and afraid, and so the tactic works.

This tactic is going to fucking burn a collection agency who tries it against a debtor who has been granted a bankruptcy discharge when the 'debtor' countersues in civil court and succeeds in convincing either a state or federal prosecutor into pressing charges.

[Singular Intellect]

there are cases, from those who I know, who, as children, accumulated debt paying their parents expsenses.

That is my current predicament; I certainly wasn't a child the last few years, but I let my parents take advantage of my generousity and stupidity at not seeing through their 'problems'; the end result being I'm over thirty thousand dollars in debt, when in fact I with my spending habits I shouldn't have any at all.

[Death from the Sea]

so if you don't pay a debt within 6 years, then it is basically void? that is what I am getting out of the article... or is that for bankruptcy only?

[Ariphaos]

so if you don't pay a debt within 6 years, then it is basically void? that is what I am getting out of the article... or is that for bankruptcy only?

It is. If you are taken to court for the debt before that deadline, and issued an order to pay, you get a new, reset deadline. For each your you don't pay, 10% is tacked onto the amount and resets your deadline again.

So these situations are usually for debts over $1,500 or so.