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What is Zombie Debt and How Can You Deal With It?

Written by
Andrew Tavin, CFEI
Andrew Tavin is a personal finance writer who covered budgeting with expertise in building credit and saving for OppU. His work has been cited by Wikipedia, Crunchbase, and Hacker News, and he is a Certified Financial Education Instructor through the National Financial Educators Council.
Fact Checked by
Tamara Altman
Dr. Altman has over 25 years of experience in social science, public health, and market research, statistics, evaluation, and reporting. She has held positions with, and consulted for, many government, academic, nonprofit, and corporate organizations, including The Pew Charitable Trusts, the National Park Foundation, Stanford University, UCSF, UC Berkeley, and UCLA.
Read time: 6 min
Updated on July 27, 2023
A man with an expression like a deer in headlights
Zombie debt can haunt your finances, but knowing how to deal with it can help you to survive.

It’s also important to keep your credit score in mind. Zombies have been a major part of our culture for decades now. There’s something about these walking corpses that captures our collective imagination, whether from fear or a desire to build our ideal survival crew. Much less exciting than zombies, however, is zombie debt.

What is zombie debt?

Zombie debt, sometimes called phantom debt, is a term that can apply to a few different kinds of debt. It could be debt you have forgotten, old debt you’re no longer obligated to pay, or debt that was never your responsibility in the first place. By determining exactly what kind of zombie debt you’re dealing with, you can make a plan to either pay it off or stop the zombie debt collectors from bothering you.

Different types of zombie debt

There is not necessarily one single type of zombie debt, and the term is often applied to three different categories: 

Let’s further explore each of these below.

Zombie debt No. 1: Forgotten debts

If you don’t pay your bills, you may hear from a debt collection agency. This is because lenders can turn over their debts to a collection agency, which will then use every tool that both state law and federal law allow to extract your unpaid debts.

Did you manage to dodge those collection calls, and now you think those debts are truly dead? Unfortunately, that’s not how zombie debt works. 

Debt buyers are organizations that will purchase debts the original creditor has given up on collecting. They will then attempt to collect all or part of the obligation to make a profit on their purchase.

Zombie debt No 2: Debts outside the statute of limitations

Depending on where you live, different types of debt will be subject to different statutes of limitations (the time frame during which you can be sued for nonpayment). As long as a debt you owe is within the statute of limitations, you can be sued in court for not paying.

However, attorney David Aylor says a zombie debt can’t hurt you if the statute of limitations window has closed. 

“In that case, it’s classified as uncollectible and the lender no longer has a right to take legal action against you,” Aylor says. “To ensure your debt is indeed ‘dead,’ you’ll need to check your state’s statute of limitations on debt.” 

The statute of limitations will vary, depending on the debt type and state. So while it may be 3 years in one state for one type of debt, it may be 15 years in another for a different type of debt. However, if the zombie chasing you is an old debt that’s still within the statute of limitations, you may need to make a plan to deal with it or you could find yourself in a courtroom.

While debt holders can no longer sue you or force you to pay through court order once an unpaid debt has passed the statute of limitation, it can still appear on your credit report and contribute to bad credit history. 

Zombie debt No. 3: Fraudulent debt or errors

If a debt collector comes calling or emailing or knocking on your door in an effort to collect a debt you don’t recognize, don’t immediately assume it’s your mistake. Some zombie debts could be the result of creditor mistakes, or even outright scams.

The more debts are bought and sold, the more likely it becomes for mistakes to be made. It’s also possible for identity theft to lead to false debts.

It’s important to know your rights. According to the Consumer Financial Protection Bureau, you can refuse to speak to a debt collector until they send you a debt validation notice proving that you actually owe the debt in question. 

The Fair Debt Collections Practices Act forbids debt collectors from attempting to collect on debts they know you don’t owe, so if you can prove they’ve made an error and they continue to harass you, they could be open to Federal Trade Commission penalties. Ahren Tiller, founder and supervising attorney at The Bankruptcy Law Center, suggests filing a complaint with the CFPB if you suspect FDCPA violations. 

Can you ignore zombie debt?

The short answer is “no.” You cannot ignore zombie debt without facing some sort of consequence. That consequence will vary depending on the type of zombie debt that’s haunting you. Let’s look at a few different scenarios:

Scenario No. 1: You actually owe the debt

If you actually have an outstanding balance on an unpaid debt, you are likely going to have to pay up – even if it’s over time.

“There are a few strategies that you can use to handle forgotten debts that you legitimately owe,” Tiller says. 

Tiller suggests looking at your personal financial situation to see if there are changes you can make to fit the debt payments into your budget. If not, he advises contacting your creditors and attempting to agree on a repayment plan. If that’s not an option either, see if they’re willing to settle for less.

“In some cases, creditors are willing to accept a partial payment in order to resolve the outstanding balance,” Tiller says. 

If you can’t manage on your own, it might be worth asking for help from a financial advisor or a credit counselor to discuss a debt management plan. Tiller recommends consulting an attorney, as some debt relief strategies like bankruptcy can wreak havoc on your credit score.

Scenario No. 2: Your debt is past the statute of limitations

While you don’t want to ignore a debt in any type of capacity, you still have rights when it comes to protecting yourself against creditors who are contacting you after the statute of limitations has closed. 

Making even a small payment on an old debt could also cause the statute of limitations to reset.

“If lenders are coming after you via phone, email, or letter for your expired debts, you need to choose your words very wisely,” Aylor warns. “If you acknowledge that you owe the debt, it can become active again.”

Instead of trying to navigate phone calls about a debt that’s passed this time limit on your own, you can take proactive legal steps.

“You’ll want proof to show a judge, should you need to, that the debt has reached the statute of limitations with a formal record of the last payment you made, often the last personal check paid, or a bank statement with the final payment on it,” Aylor says.

Scenario No. 3: Fake debt collectors keep calling

If debt collectors will not stop harassing you over false debts, consider enlisting the help of a law firm dedicated to fighting unfair collection processes. 

Proactively combat zombie debt

Finally, taking some proactive steps can save you headaches down the line. Experian, TransUnion, and Equifax, the three major credit bureaus, are required to provide a free copy of your credit report each year. Go to to get yours so you can check it for errors and alert the respective bureau if necessary to have them corrected. False debts will drag down your credit score just like real debts, so you should try to correct mistakes as soon as possible.

It’s hard enough keeping up with the living debt. Don’t let zombie debt haunt your nights.

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