Posts Tagged: ‘zombie debt collection’

How Debt Collectors Trick Consumers into Reviving Old Debts

August 8, 2019 Posted by kingcade

Creditors can be extremely creative when attempting to collect on a debt. Many of them rely on the fact that most consumers do not truly understand the laws surrounding debt collection. The average consumer may not know creditors only have so long to collect on a debt under the state’s statute of limitations. After that time has passed, the creditor or debt collector is barred from taking legal action to collect on the debt.  But that does not mean they can’t stop trying to collect on it.

The problem is many debt collectors will still attempt to get payment on the debt, even after it is past the legal statute of limitations. This practice is often referred to as “zombie debt collection.” Their hope is that the consumer will pay on the bill, even just a partial amount, reviving the debt, and then giving the debt collector the legal right to sue to collect on the remaining debt.

It is important that consumers be aware of what the statute of limitations is for their given state. In Florida, debt collectors may not collect on a debt that is more than five years past due for written contracts, such as personal loans. For other debts, including those with revolving accounts, such as credit cards, the statute of limitations is four years.

It is estimated that consumer debt has reached a record level of more than $4 trillion owed. As a result, the debt collection industry is upping their efforts to make profits from debts that were once considered written off and essentially not collectible, including debts that are past the statute of limitations.

Debt collectors are using different tactics to get consumers to reset the statute of limitations. Some have sent credit cards to the account holders that let them pay off the old debts by using the card, or they allow the consumer to make a smaller payment to stop the collection calls. If the consumer is not otherwise aware of the fact that he or she has rights under the Fair Debt Collection Practices Act (FDCPA) to demand that the calls stop, he or she may believe payment is the only option to end the harassment, which is not the case.

This new push to try to collect on old debts is having an adverse effect on the court system with an increase in the number of debt collection lawsuits being filed. In New York City, it was reported that the number of debt collection lawsuits has drastically increased to more than 100,000, as compared to the 47,000 filed in 2016.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Source: https://www.washingtonpost.com/business/2019/08/07/zombie-debt-how-collectors-trick-consumers-into-reviving-dead-debts/?noredirect=on

 

 

How to Slay Zombie Debt

May 13, 2019 Posted by kingcade

Similar to its name, ‘Zombie’ debt is debt that has literally come back from the dead.  Debt collectors purchase these old debts for pennies on the dollar, hoping consumers will be tricked into paying.  Oftentimes, they use intimidating tactics to scare consumers into paying the debt that is not legally owed.  This is a practice that has become increasingly popular in Florida.

Some consumers will mistakenly pay on zombie debt that is past the statute of limitations because they are not aware of this legal protection. It is extremely important that you not pay on a debt that is past the statute of limitations.  A single payment can reactivate the debt and reset the clock on the statute of limitations. This tactic is otherwise known as re-aging an old debt, and it is one that is commonly used by debt collectors to trick consumers into paying on a debt that they would not be legally obligated to pay.

Zombie debt can include different types of old debts, including the following:

  • Debts the consumer forgot about and has not made payment on past the statute of limitations;
  • Fraudulent charges from identity theft;
  • Debts that the consumer already settled with a creditor;
  • Debts that were discharged in bankruptcy; and
  • Any debt that is beyond the statute of limitations, meaning the consumer could not be legally sued for payment.

Making a payment on an account that is past the statute of limitations may seem harmless, but this single payment could bring the account back to life, meaning it is now legally collectible. Therefore, if payment is made on the old account and no further payments are made, the debt collector may be able to then take the consumer to court to get a judgment on the debt.

Debt collectors will often purchase old debt from the original creditors to do just that. The original creditor can sell the old debt from their books, and the debt collector will then try to trick the consumer into making payment. Unless the consumer knows the laws, they may be scared into making payment when they are not obligated to do so.

If you receive a phone call from a debt collector and suspect that the call involves zombie debt, the first step is to get information on the debt. Consumers are entitled to ask for written confirmation on the debt. Look through old records to compare what the debt collector is telling you with what you have regarding what you owe. If the numbers do not match up, or if the debt is beyond the statute of limitations, do not make payment. Never let the debt collector pressure you during this initial phone call. You are within your rights to request confirmation on the debt in a debt validation letter, which must include the name of the original creditor, the amount owed, and how you can challenge the debt.

The statute of limitations in Florida varies depending on the type of debt. If the debt comes from a written contract, the statute of limitations is five years. For other debts, such as oral contracts or revolving accounts, which include credit cards, the statute of limitations is four years. If the last payment on the account makes the debt past the statute of limitations, the creditor or debt collector no longer has legal rights to sue to collect the money owed.

If the debt involved is “zombie debt,” the consumer has several different options. If the debt has, in fact, been paid or legally discharged, the consumer should write a letter to the debt collector, informing them that they must cease contact regarding the debt. If the debt does not belong to the consumer or is invalid, the consumer should write a letter challenging the debt within 30 days of contact with the collector. If the debt is legally collectible, and the consumer can pay, make sure to get a payment agreement or arrangement in writing with the collector before making any payment. If the consumer does owe it but cannot pay the debt, other options, such as credit counseling or even bankruptcy could help with the situation.

The key is to get any agreement or communication in writing. Written communication will produce a record to protect your rights in the event the communication continues or if any legal action is taken by either party.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Florida Ranks in the Top 5 States for Invalid and Illegal Debt Collection

April 3, 2018 Posted by kingcade

Invalid and illegal debt collection practices are at an all-time high across the country, and Florida is no exception.  Data was analyzed from the Consumer Finance Protection Bureau (CFPB) to identify the states that engaged in these deceptive and illegal practices.  ‘Zombie’ debt collections are rampant in South Florida and involve attempts to collect debts not owed, those that were already paid or discharged in bankruptcy, debts owed by someone else, or are a result of identity theft. Typically, this debt collection practice is done by third-parties, who have collected these debts written off by the original creditor.

The five states in which zombie debt collection is most prevalent are:

  1. Delaware– Delaware leads the nation when it comes to the likelihood of having to deal with a collection agency trying to collect a debt you do not owe.  With a total of 422 complaints in the Consumer Complaint Database, Delaware has a per-capita rate of 44.72 complaints per 100,000 residents.
  2. Florida– Florida comes in at number two with 42.43 complaints per 100,000 residents (a total of 8,314 complaints in all).
  3. Georgia– Georgia trails Florida by two hundredths in its per capita incidence rate of reports of zombie debt collection attempts, with 4,258 complaints registered and a population of almost exactly 10 million residents.
  4. Nevada– Like Florida, Nevada has incidence rates of illegal debt collection attempts well above the national average of 25.84 per 100,000.
  5. Maryland– Maryland has 38.65 complaints per 100,000 residents. The affluent and suburban Prince George’s County has an incidence rate of 66.6 per 100,000 residents.

Knowing which debt collection agencies have a history of practicing zombie debt collection in your state can help you avoid being a victim.  The three debt collection agencies most likely to engage in invalid and illegal debt collection practices in the country are:

  1. Encore Capital Group
  2. Enhanced Recovery Company (ERC)
  3. Portfolio Recovery Associates

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.