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Bankruptcy: Zombie debt could get worse soon

Paying off debt can take time and effort, but it is often a great relief when it is all said and done. Most people in Connecticut rightly expect for old, paid-off debts to stay in the past where they belong. Unfortunately, so-called zombie debt is a problem that affects many people, harming their financial security. When plagued by zombie debt, some find that filing for personal bankruptcy is helpful.

Approximately 75 million people in America are affected by debt collection efforts for things like student loans, credit card debt, medical bills and more. However, a significant portion of these individuals may not actually owe anything. In 2018, the Federal Trade Commission and the Consumer Financial Protection Bureau -- the CFPB -- received 62,800 consumer complaints, reporting that they were being hounded to pay debt they had already paid off or simply did not owe in the first place. Debt that has already been paid off is referred to as zombie debt because it is debt that essentially comes back from the dead.

In May 2019, the CFPB proposed a new rule that would weaken consumer protections. If implemented, the rule would allow debt collection agencies to file lawsuits against individuals without adequately reviewing necessary information. This rule could lead to the rise of zombie debt and would also make it easier for agencies to pursue debts that are outside the legal time limit.

Connecticut consumers deserve protection from predatory collection efforts, including being sued for zombie debt. With the CFPB apparently looking to decrease consumer protection, some individuals might find themselves facing extremely difficult financial situations. Bankruptcy can help completely discharge debts. This not only provides a more secure financial future but can also help a person achieve a much-needed sense of peace.

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