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

Zombie walk

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When "dead" debt haunts you

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

Andrea Spinelli | Pacific Press | LightRocket | Getty Images