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What is 'zombie debt' with regard to bankruptcy?

Arizona residents may love their zombie movies and shows, but may be less enthralled by 'zombie debt.' . A zombie debt is one that is old, and generally not owed any longer, but like zombies in television shows, continues to haunt the debtor. Recently, many debtors have sued big banks for not killing their zombie debt, allowing it to carry on as unpaid debt and affect their credit ratings, even though it was cleared in bankruptcy.

Borrower's lawsuits claim that zombie debts are not only inaccurate, but also affect credit scores negatively. This, in turn, makes it harder for people to get jobs, find places to live and even borrow money at low interest rates; basically making it harder for people to get the fresh financial starts they were expecting to receive by declaring bankruptcy. Even though the debt was discharged in bankruptcy, debtors may be pressured into repaying the debt just to improve their credit scores.

Several lawmakers have recognized the problem zombie debt poses to hardworking people across the country and have proposed a bill to kill zombie debt for those whose credit card bills survived bankruptcy. The act, known as the Consumer Reporting Fairness Act of 2015, would force big banks and other creditors to inform credit card companies that a bankruptcy judge has canceled a person's debt. It would also allow debtors to sue those who have not corrected their credit reports and potrntially recover damages.

While the country waits to see how far this bill will go, Arizona residents considering filing for bankruptcy to overcome their financial challenges may still want to consider the process. Wiping out credit card bills is just one of the benefits the process can offer debtors on the journey to a possible new financial beginning.

Source:, "A law to kill zombie debts that outlasted bankruptcy," Kay Stech, July 28, 2015