What Your Clients Need to Know About Zombie Debts
With so many financial hardships affecting millions of American these days, zombie debts are among the most unexpected. They certainly surprise the affected individual and may even affect your ability to provide a loan. Here is what you need to know about zombie debts and how they could affect your clients and your business.
What Is Zombie Debt?
As you can imagine, a zombie debt is one that was supposed to be dead but has managed to come back to life. These debts may have already been paid off by the individual, been absolved as part of a bankruptcy or have exceeded the statute of limitations for repayment. In some cases, these debts may never have existed but may simply be errors on the part of creditors.
How Can Zombie Debt Affect Your Clients?
Of course, having an old debt suddenly come back to haunt someone is both surprising and worrying. In some cases, it can even lead to foreclosure on a home that the individual thought was paid off. Clients may be confused into thinking that a second mortgage was discharged when in reality it was only “charged off” by the creditor. Now that home values have skyrocketed, many lenders believe that this is the time to try to recoup some lost money.
How Do Zombie Debts Affect Future Loans?
Not only can zombie debts affect your clients, but also they can affect your ability to provide a loan. Zombie debts may suddenly show up on a credit report, destroying a credit score. Many times, these are hardworking individuals who truly believed that they had done everything possible to achieve financial independence.
With zombie debts rising across the country, those seeking mortgages may find themselves suddenly saddled with unexpected bills. It is vital that individuals address any zombie debts before taking on new mortgages. Some possible options include challenging the debt with the collections agency or seeking debt relief through credit counseling agencies.
Have questions? Speak to a Private Eyes expert for more information.