Zombie Debt

An old or bad debt that in no longer active or declared personal bankruptcy, which suddenly blips from collecting agencies. Zombie debts can be broadly classified as:

  • Debts that don’t belong to your account, dropped by mistake.
  • Collection after declaring bankruptcy
  • Fully paid with no balance due.

Starting to pay a zombie debt is attributed to bringing a zombie alive, which will increase its activity and haunts you to the rest of the life until the amount is paid. Once the so called withdrawer starts to pay the debt, feeding the zombie will never drag it back to the grave.

Banks, who lend you money generally don’t do this, the notification comes out of the blue is from the collecting agencies who help banks in recovering the lent debt. The collecting agencies prey on borrowers making bogus claims for personal benefits.

The scavenger hunt may proceed to negotiate for small payments and guarantee to set free. Dubious it is, whether the repayments go to the bank or the flow truncates at the collection agency. If a loan is not paid for more than 5-7 months it is classified as a Non-Performing Asset (NPA) and no bank pesters you to pay.

Should I repay a zombie debt?

Zombie debts are meant to be passive unless you notice and start paying the dues. Do not pay a zombie debt, once the person (Borrower or mistaken) starts to repay, has to fulfil the financial obligations of an ideal debt including the accrued interest. Avoid these kinds of debt, especially you are not the one borrowed.

What should I do about a zombie debt?

You can resist to pay even though the agencies have the right to collect if the claim is legitimate. Raise a ticket on the redressal platform of the regional income tax department to know whom, when and on what purpose the transaction was made. Ask for the credit related documents, including the loan contract which the agencies fail to produce.

What should I do want a loan on the account having zombie debt?

Task of lending demands strenuous efforts if you are a declarer of personal bankruptcy and a loan can be offered with high interest. If a loan is mistakenly dropped into your account, raise a complaint to your lender to know the causes of lending and its equally difficult as the former case. Better lend with the spouse’s identity, making a joint account.