‘ZOMBIE DEBT’ COMES BACK TO HAUNT CONSUMERS

June 27, 2006

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Some consumers have been experiencing the unfortunate occurrence of “zombie debt,” in which bad debt buyers or their collection agencies try to illegally re-age a consumer’s debt and report the old debt to the credit bureau as a new obligation, according to a commentary in the Orlando Sun-Sentinel yesterday. Fort Lauderdale, Fla. resident Latoya Gibson became aware of the re-aging scheme when a debt collector filed a lawsuit against her for an old debt that had been discharged through bankruptcy. Marilyn Gallington, a title company marketing representative in Fort Lauderdale who has experienced re-aging on her own credit record, says the practice has blindsided her low-income customers who are first-time homebuyers. Re-aging was prohibited in 2003 through amendments to the Fair Credit Reporting Act. The practice “is illegal,” says Clarke Brinckerhoff, an attorney at the Federal Trade Commission in Washington, D.C. “That’s the law. It doesn’t make any difference when the credit or debt collection agency reports the account,” he said.