What is “zombie debt”?

When you file for bankruptcy, you do so expecting that the process will yield the discharge of certain debts and a fresh financial start. Some may find that some of their debts are not being recognized as discharged following bankruptcy. This type of debt is sometimes known as “zombie debt” because the discharged (or dead) debt keeps causing trouble.

While most major creditors and businesses generally recognize the elimination of your debts after bankruptcy, there are times when creditors sell debt to debt buyers at a discounted price, who may then try to collect the discharged debt from the consumer.

The debt buyer may report the debt to credit reporting agencies, make collection calls, send letters, and basically behave in the normal ways creditors do. However, zombie debt is not legally enforceable. These businesses are technically breaking state and federal laws by making it appear that the debt you had discharged in bankruptcy is still active. 

Handling Zombie Debt

It’s important to keep an eye on your credit report following bankruptcy to make sure that your debts are actually being shown as discharged. If you find discrepancies, you can contact the credit reporting agency to straighten things out.

If this doesn’t resolve the issue, you may have to speak with a bankruptcy attorney and have him or her make the call so the debt is properly classified as having been discharged. If problems continue with zombie debt, your attorney may be able to file an action against the creditors trying to collect the debt and engaging in abusive or illegal behavior.

Having a bankruptcy attorney on your side is important throughout the bankruptcy process and may even be important after the bankruptcy is complete if there are additional complications. Your attorney can help make the bankruptcy go more smoothly and can stand up for your rights during the bankruptcy process or following debt discharge. Call 888-584-9614 for a free consultation with a lawyer at Warren & Migliaccio in Richardson, Texas.