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|Zombie Debt: The Dead Dollars That Walk Among Us [Guest Post]|
|Personal Finance - Bill Collectors|
|Written by Guest|
Today's post is a Debt Black Hole Guest Post by Suzan Bekiroglu. Suzan is a published author, freelance writer and editorial consultant for secureloanconsolidation.com. After receiving a Bachelor of Arts degree from the University of South Florida, she faced the mounting obstacle of paying over $24,000 back in student loan debt. Determined to eliminate the debt, she became knowledgeable about money management. She seeks to educate others with tips on managing student loans and other kinds of debt, as well as in general personal finance and money saving tips.
Hershel said it, standing out there on the highway the morning after the zombie attack at the farm. "Christ promised a resurrection of the dead. I just thought he had something a little different in mind." He might as well have been talking about walking debt as "The Walking Dead." As a nation, Americans are infected with debt; a lot of it gone bad, on everything from credit cards (2.93% in January 2012), to mortgages (4.27%). Even though aggregate consumer debt fell by $126 billion in February 2011, the total still stood at $11.66 trillion.
Americans may be paying their bills on time now, and managing their money more effectively thanks to four years of the Great Recession, but the climate is ripe for a zombie debt apocalypse. There's no rogue virus or voodoo curse involved. It's actually pretty simple financial necromancy. Collection agencies buy old debt for pennies on the dollar and then go after the consumer for the full amount, thus turning a tidy profit.
So what do you do when glassy-eyed, slack-jawed debt "walkers" come after you to suck your brains out? You go for the head shot; it's the only way to take them out. Don't run. Don't hide. Find out exactly how much ammo you have, and fight back.
Some Zombie Debt May Be Deader Than You Think
Under the terms of the Fair Debt Collection Practices Act, within 35 days of being contacted by a debt collector consumers can request in writing via certified mail with return receipt that the debt be verified. The validation must include documents from the creditor of origin proving the amount is indeed owed and is correct, and that the current agency has a right to seek its collection.
There is also a statute of limitation on some debt. People often confuse that stipulation with the credit reporting time limit, which is simply the length of time credit bureaus can show delinquent debts on a credit report. For most obligations, that's seven years from the time the debt became delinquent. A bankruptcy, however, can be shown for 10 years, and tax liens for 15. These terms are laid out by the Fair Credit Reporting Act.
The statute of limitations on a debt starts from the last date of activity on the account and varies by state. Normally the period is 3-6 years, but in some instances goes as high as 15. Some debts never expire, including federal students loans, child support (in some states), and federal income taxes.
Always check to see if a debt is valid. If it's not, you don't have to pay the collector, but the debt is not erased per se and the collector can still file a lawsuit against you. Also beware of any "official" activity with the account. If you contact the creditor and even so much as make a verbal promise to pay, the statute of limitations period is restarted. So, in verifying the length of time the debt has been delinquent, consult your personal records only!
Even with Valid Zombie Debt, Fight the Harassment
Even if the zombie debt is valid, however, you don't have to let the collectors beat the door down. You can send a cease-and-desist letter via certified mail to the collection agency requesting that all communications stop immediately. (Make sure you send it return receipt requested.) If the collection agency continues to harass you, you can take legal action against them.
At the same time, however, don't ignore the issue, especially if you get a court document indicating a lawsuit has been filed. At this point, you need a lawyer. If allowed to go unaddressed, an attempt to collect a zombie debt can infect your whole financial life until your credit rating is endangered. Then you won't just have one walking corpse on your hands, but a whole stinking herd of legal problems.
**Dave's Note: Although I, personally, would not consider a debt consolidation loan like the ones offered by the company Ms. Bekiroglu is associated with- I chose to post this article anyway. The wonderful thing about personal finance is that everyone is entitled to their opinion and I'd rather present my readers with many points of view, instead of just one. Some people may like loan consolidation programs, just as some people- but not me- liked Babylon 5.**
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