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Zombie Debt Buyers and Your Rights

You may have heard something about zombie debt collectors – and it doesn’t have anything to do with a popular new movie coming out this summer. Zombie debt collectors are companies that try to collect on debts with statute of limitations (SOL) that have passed. Having defended debtors sued by credit card companies and sought after by debt buyers for over ten years, I know how these companies operate.

Zombie debt buyers do buy old credit card debt. We don’t see this as frequently in Ohio because up until recently, the statute of limitations was 15 years. For most grandfathered accounts, the statute of limitations is still 15 years. Collecting on past debt beyond the statute of limitations is a much more common problem in states like California, where the SOL is just four years. If the debt is truly past the statute of limitations, then a consumer has a Fair Debt Collection Practices Act (FDCPA) claim against the collector and the debt buyer for collection attempts. (The FDCPA only applies to third party collectors, but Ohio treats debt buyers as third party collectors.)

A company like Chase that has not sued an Ohio debtor on a credit card account for years might attempt to collect on the debt for a while, and then sell it to a debt buyer – this is normal if it occurs before the statute of limitations expires. The debt buyer then continues to try collecting on the debt. If the company cannot collect on the debt outside of litigation, this usually ends in a lawsuit against the consumer who acquired the debt.

There’s not a way for you to stop your debt being sold to a debt buyer other than remaining current on the account. Credit card companies only sell delinquent debt to debt buyers. That doesn’t mean that you are without options if you are sued by a debt buyer. For example, forcing the debt buyer to provide it actually owns the debt is the first step. Debt buyers will frequently attach a generic bill of sale without providing supporting exhibits. We have successfully argued that this is insufficient documentation to prove ownership of the account when defending our clients against unfair debt collection practices. You might also be able to dispute the interest rate that the debt buyer alleges. Furthermore, it is up to the debt buyer to prove the alleged balance; oftentimes the company is unable to prove this, and that can be an element of debtor defense.