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Zombie Student Loans

a zombie skeleton with its head tipped to the side


Zombie student loans are old student loans that someone is demanding you pay, even though you already paid off the student loans in full, the loans were discharged, cancelled or settled or the statute of limitations expired.

Some zombie student loans are legitimate. For example, borrowers who file for bankruptcy might incorrectly believe that their student loans were discharged along with their other debts. But, bankruptcy discharge of student loans requires an extra step, as the borrower has to demonstrate undue hardship in an adversarial proceeding.

Nevertheless, most zombie student loans are resurrected when old student loan debt is sold to a guarantee agency or collection agency, or someone reloads an old backup of loan records. The loan records might be incomplete, lacking subsequent transactions which were paid, settled or cancelled. Zombie student loans also can be caused by a case of mistaken identity or identity theft.

To protect yourself from this, keep copies of all student loan paperwork indefinitely. This includes copies of cancelled checks or other proof of payment, as well as the paid-in-full statement when you pay off the loans in full. Retain copies of the loan discharge or cancellation paperwork forever.

Unfortunately, there is not statute of limitations on federal student loans. It can be difficult to prove that a federal student loan was paid off or discharged decades after the fact, unless you kept copies of the paperwork.

It’s also a good idea to check your credit reports once a year, since student loans should show up on your credit reports. You can get a free copy of your credit reports from Experian, Equifax and Transunion once every 12 months through the FTC’s website,

If you receive a request for payment of a zombie student loan, demand proof that the debt is owing and legitimate. Send a letter within 30 days by certified mail with return receipt requested. Ask for a copy of the original signed promissory note, the name of the original creditor, the original account number, the original name and address of the borrower, the original loan amount, the amount currently owed and the complete payment history.

Ask for the date of the first late payment or the date the loan went into default. Also ask for proof that the collection agency owns the debt. Do not, however, ever acknowledge the debt. Do not admit that the debt is yours, even if you think it might be yours. Do not make a payment, not even a token payment. Do not sign any documents sent to you, as this admits liability.

Although there is no statute of limitations on federal student loans, private student loans are subject to a statute of limitations. The statute of limitations on private student loans varies, depending on the state. Typical statutes of limitation are three, six or 10 years.

Once the statute of limitations has expired, the lender has no legal recourse if you refuse to pay the debt. A lender cannot sue you to recover time-barred debt. If you make a payment on the debt or otherwise acknowledge the validity, however, it can reset the clock on the statute of limitations.

If you owe the debt and the creditor makes a settlement offer, ask for the settlement offer in writing without acknowledging the validity of the debt. Have this settlement offer reviewed by an attorney. In particular, you want to be sure that the creditor owns the debt and that you will receive a paid-in-full statement upon payment of the settlement. If you are sued, always show up in court to dispute the debt, even if you think the zombie student loan is not legitimate.

If you don’t show up, the creditor can get a default judgment against you and use it to garnish your wages and seize your assets. It is best to hire an attorney if you are sued. Be sure the attorney demands proof that the debt is owing and says if the statute of limitations has expired. Many collection agencies and guarantee agencies do not have a copy of the signed promissory note and therefore cannot prove that you owe them any money.

If a zombie student loan shows up on your credit report, dispute it with the credit bureaus. The Fair Credit Reporting Act (FCRA) requires creditors to verify disputed account data within 30 days. If you are disputing that the debt is yours, the creditor must provide proof that the student loan was borrowed by you and is still owing. If the creditor cannot verify the accuracy of the disputed information, it must be removed from your credit report.

You can banish the zombie student loans by exercising your rights under the Fair Debt Collection Practices Act (FDCPA). You can tell a debt collector to stop contacting you about the zombie student loans. This does not affect whether you owe the debt or not, and the debt collector can still contact you to tell you about specific actions they are taking (filing a lawsuit), but it will stop most of the harassment.

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