Zombie Debt - Definition

A zombie debt is an old debt that a consumer believes has been addressed and a creditor attempts to collect. Most typically, this happens when a company buys up accounts owned by another company, often for very low prices, and then starts collecting on them. While the concept of zombie debt is quite old, it has gotten a Lot of attention since the 1990s.

A common example of a zombie debt is a balance on a credit card or loan that is written off during bankruptcy proceedings. The creditor records the debt as not collectible, and the debtor thinks that it has been put to rest. When another company buys old debt, it may attempt to collect on the debt, sometimes adding exorbitant Interest charges to inflate the total Amount owed.

Terms near "Zombie Debt "

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