Best Debt Companys

162 Companies 2,937 Real Customer Reviews

What Is Phantom Debt? Debt Collectors Could Chase You for Debt You Don’t Owe

Posted By:  |  April 25, 2014  |  0 Comment(s)

65a

If you have debt, you know how scary a specter it is. Amounts that you owe from mortgages, student loans, or overdue credit card bills can be rather intimidating. However, phantom debt is an altogether different kind of debt that can cause you to lose sleep. What is phantom debt, and what’s so intimidating about it? Here’s what you need to know about phantom debt if collectors are making your life a nightmare.

The Phantom Is There, Inside Your Mind

Phantom debt is a debt that doesn’t actually exist; it’s a debt that you don’t owe. A phantom debt is any debt that is mistakenly attributed to a consumer or is so old that the consumer is no longer responsible for it. It is also called zombie debt, so named for the fact that it has no substance or is a dead debt that still chases you. It is a little-known fact that debts expire; depending on your home state, debt collectors may not be able to collect on a debt that is outside the statute of limitations, or they can try to collect but they cannot file a lawsuit against you. This is one way in which phantom debts are born. They can also originate if the debt collector illegally reports a paid debt as still owing, assigns you a debt that someone else accumulated, or fabricates a debt when in truth you owe nothing. In all cases, the debt has no substance, significance, or legal weight to it—it is a phantom.

Consumer Protection Under the FDCPA

The Fair Debt Collection Practices Act is a piece of legislation that dictates how debt collectors can and cannot operate their businesses. This includes anti-harassment measures and restrictions on how and when a debt collector may contact you. Under Section 807 of the FDCPA, it is illegal for a debt collector to knowingly threaten, deceive, or mislead consumers during the course of collecting a debt or to otherwise hide relevant information. That means it is illegal for debt collectors to knowingly pursue you for a phantom debt.

What to Do When Phantom Debt Haunts You

If a debt collector is pursuing you regarding a phantom debt, you have options. Your first course of action should be to send the debt collector a letter of dispute. You must dispute the debt in writing within 30 days of when the collector first contacted you. After receiving your letter of dispute, the debt collector must either provide you with evidence proving the debt exists and is yours or stop contacting you. In the event that you know the debt is fraudulent, you may send a cease and desist letter. After sending such a letter, the debt collector has one final opportunity to communicate with you. In this final communication, they can tell you one of three things: either that they will stop attempting to collect the debt, that they might possibly take legal action against you, or that they will definitely take legal action against you. This is the last time they are permitted to contact you unless they decide to take you to court.

If you send your debt collector a cease and desist letter and they refuse to back down, you should report the debt collector to the FTC, the Better Business Bureau, and the Attorney General in your state. You also have the option of suing the debt collector for both incurred and punitive damages.

Phantom debt can be intimidating, especially if you’re receiving harassing phone calls from debt collectors, but this kind of debt doesn’t exist. When a debt collector is pursuing you for a debt that isn’t yours, you are under no obligation to pay anything. Consumer protection laws in the realm of debt collection put you in a powerful position when dealing with unscrupulous debt collectors, and it’s important that you use that power. If debt collectors are haunting you, exorcise your phantom debts by reporting the collector to the FTC. Don’t let collectors extort you out of your hard-earned money.

Learn more about the companies we review on the BDC Home Page.

Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

Recently Reviewed:

Trending Blog Post:

Want us to review a company?

If there is a debt company that you don't see on our site, and would like us to review, please contact us.

Real Reviews (yes they’re real)

With so many debt relief companies out there, and a lack of sites willing to bring you the HONEST breakdowns of each company, what source can you turn to for the real information you can trust?

We are dedicated to bringing the truth out, and rank debt relief companies as they should be. Through our investigation, and experience with each company, we rank each company, and bring you our honest, unbiased opinion. We also include authentic user reviews by past customers of each company that are moderated and verified.

Like many sites, we are compensated through affiliate relationships with each company we review, however all of our rankings are based on our 11-Point Ranking Criteria.

All reviews are subject to moderation and approval. Any reviews that may resemble false information, or competitors of another company will need to be verified by our staff before being approved and published. We reserve the right to approve or deny any reviews left on this site.