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Zombie Debts Lurch On

Monday, February 25, 2013

  • Rick Goralewicz
  • Legal Aid Services of Oklahoma

As I write this, TV Guide features a cover story about one of the hottest shows on television: The Walking Dead. The plot involves a band of survivors struggling to survive against a zombie apocalypse.  Movie theatres are now showing Warm Bodies, the story of a lovelorn zombie dealing with young love and teen angst. If that’s not enough, go into a video arcade and find one that does not boast of at least one game in which players dispatch a swarm of undead creatures to gain points.

Unfortunately, the zombie threat is not confined the large and small screens. The threat to seniors is particularly acute. Consumer advocates coined the term “zombie debt” in States such as Florida, which had a high concentration of retired persons. Like their fictional namesakes, zombie debts are: 1) dead but still dangerous; 2) relatively simple to avoid; 3) but if you let them overwhelm you they’ll eat you alive.

The Zombie Debt industry is largely unregulated.  It uses deceptive practices which intimidate people into paying on old debt or “debt” that they might not even owe. Like a zombie coming back from the dead, old debt comes back to haunt consumers. The consequences can be substantial.  People become so intimidated by a collector’s call that they place this virtually uncollectible (sometimes even phony) debt at the top of their budget ahead of food, medicine, or timely payment of rent and utilities.

Let’s go back over those factors.  Most zombie debts start out as legitimate debts to banks and merchants.  Over the years, however, these debts have become legally uncollectible.  There can be many reasons for this such as: the statute of limitations has expired; they may have been discharged in bankruptcy; or the records supporting the claimed debt no longer exist.  Companies buy these old debts for pennies on the dollar, and then seek to collect the full amount with interest and penalties.  They count on intimidation, guilt, and other high pressure tactics to obtain payments.

Zombie debts are easy to avoid if you know how to deal with them.  Unfortunately, many do not.  The defenses to zombie debts have to be raised by the debtor if a lawsuit is filed.  If the debtor doesn’t know the defenses or how to raise them, the zombie collector wins by default.  Worse yet, some debt collectors get consumers to make “just a small payment” to show good faith.  Even a small payment or acknowledging liability on an expired debt can waive the ability to use the statute of limitations defense. This is called “re-aging”.

Oklahoma’s statute of limitation for debts created by contract is five years.  The statute for unwritten agreements is three.

To put zombie debts to rest, Legal Aid Services of Oklahoma recommends following the vampire hunter’s playbook: use STAKES:

1) Save yourself from harassment.  The Fair Debt Collection Act protects debtors from fraudulent or overly aggressive actions by debt collectors.

2) Take care when communicating with collectors. Never acknowledge in writing that you owe the debt, and remember that it’s legal for a party to a conversation to record the call. Acknowledging could re-age the debt.

3) Avoid panic, even if you are sued.

4) Know your rights. You cannot go to jail for not paying a consumer debt, even if a judgment is entered.  Your house, social security, and most pensions cannot be foreclosed upon or garnished to pay consumer debts.

5) Exemptions and statutes of limitation exist, in part, because the law understands people on fixed incomes sometimes get behind on debts through no fault of their own.  Do not feel guilty about using the rights granted you.

6) Seek legal advice. Legal Aid Services of Oklahoma provides free legal counsel and advice on consumer debt issues.


Video created by: NewsChannel 4 KFOR-TV OKC


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