Should I pay a zombie debt?
Not before you check four things: whether the debt is really yours, how old it is, whether the time to sue has run in your state, and what a payment would change. A collector may not sue or threaten to sue on a time-barred debt, and in New York a payment after the three-year limit does not revive it. Paying can still make sense for your own reasons, but make it a decision, not a reaction.
A letter arrives about a store card or a phone bill from years ago. The company name is one you have never heard of. The amount is bigger than you remember, and the letter offers a "one-time settlement" if you pay by the end of the month.
This is a zombie debt: old, sold, and back. Here is how to decide what to do.
1. Is it yours, and is the amount right?
Old debts change hands, and records get worse with each sale. Send a written dispute within 30 days after you receive the validation notice and ask for verification and the name and address of the original creditor. The collector must stop collecting until it mails verification (15 U.S.C. § 1692g(b)). Our post on the debt validation letter shows what to write.
A collector may not collect any amount, including interest or fees, that the agreement or the law does not allow (§ 1692f(1)). Old debts sometimes come back with charges added.
Why do old debts come back at all? Because they are cheap to buy. In Midland Funding, LLC v. Johnson, 581 U.S. 224 (2017), the dissent cited an FTC report finding that debt buyers paid close to eight cents per dollar for debts under three years old, and as little as two cents for debts more than six years old. A buyer that pays that little can profit even if only a few people pay. That is a reason to make the buyer prove what it bought. See the full story of that case.
2. Has the time to sue run?
Each state limits how long a creditor has to sue. For the three states we serve:
| State | Time to sue | Source |
|---|---|---|
| New York | 3 years for a consumer credit transaction | CPLR 214-i |
| New Jersey | 6 years for contract actions | N.J.S.A. 2A:14-1 |
| Florida | 5 years on a written contract; 4 years if not founded on a written instrument | Fla. Stat. § 95.11 |
Once that time has run, the debt is time-barred. Regulation F forbids a collector from suing or threatening to sue on a time-barred debt (12 C.F.R. § 1006.26(b)). In New York, the DFS rule also requires third-party collectors and debt buyers to give statute-of-limitations disclosures on time-barred debt.
A "settlement offer" can still mislead
In Tatis v. Allied Interstate, LLC, 882 F.3d 422 (3d Cir. 2018), a New Jersey case, the court held that a letter offering to "settle" a time-barred debt could mislead the least sophisticated debtor into thinking the debt was legally enforceable, even without a threat to sue. See the full story.
3. What would a payment change?
In New York, not the clock. Under CPLR 214-i, once the three-year period has run on a consumer credit debt, a later payment, written or oral affirmation or other activity on the debt does not revive or extend it. That rule came with the Consumer Credit Fairness Act, and CPLR 214-i took effect April 7, 2022.
In New Jersey and Florida, ask first. The rules on whether a payment or a signed writing affects an old debt are different there. Do not pay, or sign anything, until you know what it does in your state.
Your credit report. Most collection accounts may not be reported more than seven years after the delinquency began; the seven years run from 180 days after the start of the delinquency (15 U.S.C. § 1681c(a), (c)). Paying does not reset that date. If a very old account is still on your report, see credit report errors.
4. Has it already become a lawsuit, or a judgment?
Some old debts come back because a judgment was entered years ago without you knowing. New York's Attorney General reached settlements in 2014 and 2015 with debt buyers, including Portfolio Recovery Associates, Sherman Financial, Encore Capital Group and Asta Funding, that together called for vacating more than 7,500 judgments the AG described as improperly obtained, many of them on claims the AG said were time-barred. The details are in our story on those settlements.
If you are sued, do not ignore the papers: the time to answer is short, and the statute of limitations is a defense you generally raise in your answer. See sued by a debt collector.
A collector that sues or threatens suit on a time-barred debt faces FDCPA liability: actual damages plus statutory damages of up to $1,000, and the FDCPA requires a collector found liable to pay the consumer's reasonable attorney's fees and costs. In Florida, the FCCPA reaches original creditors too. In New York, GBL § 349 adds a state claim. See New York, New Jersey and Florida, and our full zombie debt page.
What to do this week
- Do not pay or promise anything on the phone.
- Find the date of your last payment in old statements or bank records.
- Send a written dispute within 30 days after you receive the validation notice.
- Pull your credit reports at AnnualCreditReport.com and check the dates listed.
- If a lawsuit or a threat of one arrives, talk to a lawyer about the time limit before you respond.
Sources: 15 U.S.C. §§ 1692f, 1692g, 1692k, 1681c; 12 C.F.R. § 1006.26; N.Y. CPLR 214-i; S153 (2021); N.J.S.A. 2A:14-1; Fla. Stat. § 95.11; 23 NYCRR 1 (DFS FAQ); Tatis v. Allied Interstate, LLC, 882 F.3d 422 (3d Cir. 2018) (opinion); NY AG press release, May 8, 2014.
Common questions
Does a time-barred debt disappear?
No. The statute of limitations ends the right to win a lawsuit on the debt, not the debt itself. A collector may still ask you to pay, as long as it does not sue, threaten to sue or mislead you about the debt's legal status.
Will paying remove it from my credit report?
Not necessarily. Federal law bars reporting most collection accounts more than seven years after the delinquency began, whether paid or not. New York law has its own rule for paid collection accounts, but its reach under federal preemption is an open question.
What if I get sued on a very old debt?
Answer the suit. The statute of limitations is a defense you generally have to raise; if you do not answer, the court may enter a default judgment. In New York the complaint must now state the date of the last payment, which helps show the age.
Tell us what they did.
One conversation with an attorney, in your language. We tell you which laws the collector or the credit bureau broke, which deadline runs first, and what to save this week. If it is not a case we can take, we say so and tell you where to go.
(718) 484-7510The FDCPA and the FCRA require a company found liable to pay the consumer’s reasonable attorney’s fees and costs. Our fee arrangement is confirmed in a written retainer before we begin. English, Russian and Spanish in-house; an interpreter for any other language.