YIKES! Zombie debt ... and how to fight it off

When "dead" debt haunts you

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Cable talk-show host John Oliver made headlines in early June with his huge TV giveaway: buying up and then forgiving, live on his HBO broadcast, "Last Week Tonight with John Oliver," nearly $15 million in medical debt belonging to 9,000 Americans.

Now we at CNBC.com have what, at first glance, might seem an unrelated question for you: How good are YOU at zombie-killing?

That's zombie, as in zombie debt — debt that, according to a Federal Trade Commission explanation, "you think is dead, gone and forgotten but has somehow come back to life. Debt collectors are calling, and your walking-dead debt now threatens to wreak havoc on your finances."

Oliver proved his own mettle in battling zombie debt by buying up the $14,922,261.76 in debt for less than $60,000 — at pennies on the dollar, like scores of predatory collection agencies — and then "forgiving" the balances. (The 9,000 debtors will not have to pay income tax on the forgiven debt as income, thanks to some accounting acrobatics on the part of Oliver's producers.)

But we don't all have TV personalities backed by network cash to help us out. What IS zombie debt, exactly, and how can you protect yourself from its potentially fatal bite? We turned to the FTC for definitions and possible solutions. ...

Source: Federal Trade Commission

— By CNBC's Kenneth Kiesnoski
Posted 11 June 2016

Thought you paid? Think again ...

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Zombie debt can be:

1. "Debts you already settled with a company or other debt collector."

Source: Federal Trade Commission

In the clear? Not so fast. ...

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Zombie debt can be:

2. "Debts that were discharged in bankruptcy."

Source: Federal Trade Commission

Way past the due date

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Zombie debt can be:

3. "Time-barred debts you may have forgotten or overlooked that are past the statute of limitations."

Source: Federal Trade Commission

Out of sight, out of mind ...

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Zombie debt can be:

4. "Debts that no longer show up on your credit report, generally after seven years."

Source: Federal Trade Commission

That's not me!

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Zombie debt can be:

5. "Debts you never owed, like debts resulting from identity theft."

Source: Federal Trade Commission

'Show me some ID'

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Here's how the FTC recommends fighting back against zombie debt:

1. "Verify it's a real debt. Before you fight back, make sure you recognize it. It could be a fake debt collector calling. Also get a copy of your free credit report at annualcreditreport.com to see if the debt is listed there. If your zombie debt is a result of identity theft, you'll find tips and sample letters to help you dispute it at identitytheft.gov. "

Source: Federal Trade Commission

Learn the legal ropes

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Here's how the FTC recommends fighting back against zombie debt:

2. "Know your rights to protect yourself. Federal law gives you certain rights in dealing with debt collectors. For example, if someone contacts you about a debt you thought was dead, you can ask the collector to send you a written validation notice detailing the amount owed, and the creditor's name. By law, the debt collector has to send you this notice within five days of contacting you. "

Source: Federal Trade Commission

Don't even hit 'snooze'

Sensorwake olfactory alarm clock.
Source: Kickstarter

Here's how the FTC recommends fighting back against zombie debt:

3. "Don't accidentally reset the debt clock. If you make, or promise to make, a debt payment on a time-barred debt — a debt too old for a collector to make you pay — the statute of limitations clock may reset, and a debt collector can then sue you for the full debt amount, plus interest and fees. "

Source: Federal Trade Commission

Call the cops!

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How to fight back:

4. "If a debt collector threatens, harasses or intimidates you into paying a zombie debt — that's illegal. Report it to the FTC and your state attorney general's office. "