Zombie debt is a slang term for long written off debt that has been revived by a debt buyer for a new round of collection activity. The debt buyer may do nothing more than list it on your credit report in the hope that you’ll pay it off to raise your score, or undertake full blown collection activity. Liz Pulliam Weston writes in this MSN Article Zombie Debt is Hard to Kill about the prices that debt buyers pay for old credit card debts.
According to 2005 SEC documents, Asset Acceptance bought $4.2 billion dollars worth of debt for an average price of 2.4 cents on the dollar, Encore Capital Group bought $5.9 billion dollars worth of debt for an average price of 3.3 cents on the dollar, and Portfolio Recovery Associates bought $5.3 billion worth of debt for an average price of 2.8 cents on the dollar.
If you ever wondered how good a deal you were getting when a debt collector offered to settle your debt for 60 cents on the dollar, now you know.