People often hire a Las Vegas bankruptcy lawyer when their credit card debt overwhelms them. In these circumstances a negotiation with the bank or a Chapter 7 bankruptcy filing will usually clear up the matter. However, that assumes the debts are legitimate to begin with. A recent article in the American Banker illustrates what can happen to individuals whose debts are sold to collection agencies. Apparently, Bank of America did just that without “any representations, warranties, promises, covenants, agreements, or guarantees of any kind or character whatsoever” as to the validity of the debt. In other words BoA managed to sell debts that were paid off or discharged in bankruptcy to collectors who then attempted to enforce those debts. The term for these kinds of debts is “zombie debt”—it comes back from the grave even after you kill it.
If you have old debts that you’re unsure you paid off, here are 5 steps you can take to ensure zombie debt collectors don’t come for your money.
(1) Check your credit report. Everyone can see their credit report for free from the three credit reporting agencies once every 12 months. If you don’t know what happened to your debt, this is the first place to look.
(2) If any entry on the report reads, “defaulted” or “charged off,” then you should try to resume payment on those debts.
(3) If it reads “discharged,” “charged-off settled,” or “charged-off paid” have either successfully shed the debt in bankruptcy or settled it with the creditor.
(4) If someone calls you about debts that you have paid off, settled, or discharged, they’re trying to collect on zombie debt. In these circumstances, hire a Las Vegas bankruptcy lawyer to defend yourself. If the collector sues you, assert any relevant defenses, such as the statute of limitations running out, or failure to state a claim.
(5) Alternatively, you can sue the collector for violating the federal Fair Debt Collection Practices Act and Fair Credit Reporting Act, which can allow you to claim punitive damages, and if you discharged the debt, you can hold the collector in contempt for violating the discharge order.
Zombie debt is something no one should have to deal with, but if you are being contacted by a debt collector claiming you owe it money, it’s important to confront them directly.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.