Facing zombie debt is similar to being caught on one of the "Night Of The Living Dead" movies except that instead of your life, your financial health is at risk. What is zombie debt? Zombie debt is debt which is dead, uncollectible, discharged or even paid off that simply won't go away. Zombie debt and its collectors can be particularly aggressive and persistent because they know that some debtors will go ahead and pay the debt instead of fighting the creditors.
Below are a few tips on protecting yourself from zombie debt after bankruptcy:
- The first thing debtors exiting bankruptcy need to understand is that everyone faces zombie debt at least once in their lifetime. Knowing that, the best prevention is to diligently and habitually check your credit report once a year and address any discrepancies.
- If you are trying to purchase a home or some other large asset after bankruptcy, you probably want to check your credit at least six months before you begin your purchasing process. For some reason it seems that zombie debt shows up whenever a post-bankruptcy debtor needs to get financing for a house, car or other large purchase.
- Do not delay in addressing errors on your credit report. One of the biggest mistakes creditors make after a debtor exits bankruptcy is failing to list debt as discharged in bankruptcy. This is one of the biggest causes of zombie debt, some creditors simply don't know the debt is uncollectible and once informed they will cease trying to pursue the debtor.
- If you have informed a creditor that the debt has been discharged in bankruptcy and they persist in their harassment, immediately contact your bankruptcy attorney. The bankruptcy attorney will then ask the creditor to cease and desist with their collections actions and will inform the bankruptcy court if necessary. If the issue is escalated to the bankruptcy court, the creditor could face sanctions and fines. And depending on how egregious their violation of the bankruptcy discharge was, the debtor could receive monetary compensation for damages.