Thanks to The Walking Dead and a generation of horror movies that came before it, most everyone has heard of zombies. But not everyone has heard of zombie debt, which is debt that is dead because it's uncollectible, but can be brought back to life through improper or illegal actions of the debt collector trying to collect it.
Here's how it works: once a credit card company or other creditor charges off, i.e., writes off, an account with a balance, such as a credit card account, as uncollectible, the creditor may sell the account, along with thousands of others, to a debt buyer, which then arguably owns the right to try to collect on the account and keep whatever it can get. That may be a small amount for one account, but when repeated tens of thousands of times, the debt buyer doesn't have to collect a lot to make a profit on the portfolio of accounts it purchased for pennies on the dollar.
Many times, though, the debt collector isn't legally entitled to collect the debt from the consumer, either because the consumer doesn't owe the debt or because the statute of limitations for collecting the debt has expired. In either case, the consumer has no obligation to pay. But until recently in West Virginia, the debt collector likely would not inform the consumer, and instead try to convince her to make a payment of any amount, which would reset the statute of limitations and enable the debt collector to resume its collection activity.
But in 2014, West Virginia amended its Consumer Credit and Protection Act to add the following to West Virginia Code § 46A-2-128, which prohibits the use of unfair or unconscionable means in collecting or attempting to collect a debt, such as:
(f) When the debt is beyond the statute of limitations for filing a legal action for collection, failing to provide the following disclosure informing the consumer in all written communication with such consumer that:
(1) When collecting on a debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and
(2) When collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME) cannot report it to any credit reporting agencies."
So, for a debt that is beyond the statute of limitations, either the debt collector must inform the consumer that they cannot be sued because the statute of limitations has expired for the debt, but the debt can still be reported as unpaid to credit reporting agencies (such as Equifax, TransUnion, and Experian), or the debt collector must inform the consumer that they cannot be sued because the statute of limitations has expired for the debt and the debt cannot be reported to any credit reporting agencies.
Unfortunately, these protections don't exist in every state, as explained in this recent article about zombie debt in The Washington Post, which describes in detail how debt collectors deceive consumers into paying debts they no longer legally owe, while the debt collection industry resists efforts from state legislatures to make it more difficult or impossible to revive debt past the statute of limitations.
Schedule Your Morgantown Debt Collection Harassment Lawyer Consultation Today
If you have received a letter or notice from a debt collector and question whether the statute of limitations has expired or if you have any questions about any consumer-related issue, please call me at (304) 769-6058, email me at email@example.com, or fill out the contact form on this site. I serve clients in Morgantown, Wheeling, Martinsburg, and nearby areas of West Virginia. I look forward to hearing from you.