US Senator Chuck Schumer is calling for an end to what he calls zombie debt.
Zombie debt occurs when unpaid bills and credit card purchases that have been settled aren’t properly documented and the debt comes creeping back to unsuspecting consumers.
Schumer is calling for support of the Consumer Reporting Fairness Act to combat the undead debt.
Schumer says, “debt scavengers” or collection agencies purchase the already paid debt from creditors and banks, and then try to force customers to pay the full amount.
According to Schumer’s office, more than 2,400 cases of inaccurate debt and false credit statements were reported by upstate New Yorkers to the Consumer Financial Protection Bureau. There were 199 false debt collection complaints and 70 false credit reporting complaints submitted by central New Yorkers last year.
Those undead debts can also haunt your credit report which can kill a loan for a home or car.
Under the proposed legislation, banks, and debt buyers would be required to notify credit reporting agencies if a consumer’s debt has been settled through bankruptcy.
The bill also gives consumers the power to sue creditors that fail to report a resolved debt to a credit reporting agency.