With Halloween here, many people are undoubtedly looking over their shoulder after watching too many horror films and letting their imaginations take over. As it turns out, however, many Americans may have far more pressing concerns than just movie ghouls. According to financial experts, the real concern for many people should be the possible development of bad credit and/or the emergence of so-called "zombie debt."

In general, debt collectors have only a limited amount of time in which they may seek to collect debts, judgments or garnishments under both state and federal law. However, a consumer can inadvertently restart the clock on debt collection, meaning debt that was once extinguished can remerge - hence the term zombie debt.

Today's post - the second in a series - will briefly examine some tips/points offered by financial experts to help consumers avoid resetting the debt clock.

Post continued ...

Don't automatically rule out a letter to debt collectors

An understandable concern for many people is that if they make an effort to communicate to a debt collector that a debt is not theirs, it will somehow serve as an admission and that the collection efforts will continue with even greater zeal.

As it turns out, this is not true.

Under the Fair Debt Collection Practices Act (FDCPA), you may write a letter to a debt collector telling them that you don't owe them any money and asking them to stop contacting you.

The letter does not serve as an admission and the debt collector must generally cease contact upon receiving your letter. In addition, debt collectors are still legally required to notify you in writing if they are planning to take you to court.

Proceed cautiously when making payments

According to financial experts, it's not uncommon for consumers to receive offers from debt collection companies offering the chance to pay a small amount toward an old debt.

However, they caution consumers to proceed cautiously in these situations, as a partial payment on an old debt can actually restart the debt collection clock - meaning collection efforts may begin anew.

In fact, financial experts recommend that consumers consider contacting the state attorney general's office or the department of consumer affairs to learn more about their state's statute of limitations on collections.

"For people who have a lot of debt and are trying to decide which debt to pay and which to pay first, it makes sense for them to understand the statute of limitations issues so that they can make a rational decision on which debt they pay first," said Tracy Thorleifson, an attorney with the Federal Trade Commission.

Consider taking the necessary legal action

Finally, financial experts advise consumers to consider taking legal action in the event a debt collector is seeking to collect on a debt for which the debt collections clock has expired.

However, they advise that consumers must remain proactive in this regard.

"It's up to you to go to court and raise the defense that the debt is beyond the statute of limitations," said Thorleifson. "Don't trust the court system to figure it out on your behalf."

Stay tuned for more from our San Antonio bankruptcy blog ...

Contact an experienced legal professional to learn more about managing credit card debt/bad credit and fighting creditor harassment.

This post is for informational purposes only and is not to be construed as legal or financial advice.

Source:

Fox Business, "Will payment on an old debt reset the clock?" Oct. 21, 2011