Zombie debt also know as Scavenger Debt Collection is a new game in the unscrupulous activities in business today that could affect anyone who are overloaded with debts. It is an investment by companies who purchase uncollectible, written-offs debts at a cheaper rate. The industry is so profitable that two of these investments have succeeded in occupying the Fortune 500 list.
Scavenger Debt Collection is the practise of buying old debts for pennies on the dollars and attempting to collect the whole amount with interest. For example, suppose you owed Andhra Bank exactly $2,000. The bank attempted to collect the amount, but eventually wrote it off and turned it over to debt ollection agency. The collection agency also failed to collect it from you by calling you and sending several letters. Now, XYZ Bank has finally sold it to a zombie debt firm for about $100.00. Now the firm will go after you for the entire $2,000 plus interest.
Though such investment can’t be said to be completely illegal, but thousands of reports have been registered by the consumers who claim that scavenger debt collectors violate the FDCPA and state laws. There are many evidences of such collectors of using sometimes forceful and illegal debt collection tactics to get you pay and collect as much as they can. But this can be said to be an incredible lucrative venture because they offer to settle the debt for a much lower amount than the original.
“They are sold in packages by banks, debt buyers and brokers. It consists mainly of debt is 10 + years old and is sold for a fraction of a cent on the dollar. The buyer hopes that with strong arm practices they can recover 0.5 – 1.0 % of the debt. When you are dealing with packages consisting of 300 million dollars + it becomes profitable.”
Reputed collection agencies do not do this and it’s what gives the collection industry a bad name.
