Zombie Debt - The Bills That Won't Die

Gregg Lombardi - Executive Director

The Zombie Debt Eradication Team has been busy this summer. If you’re not familiar with Zombie debts, they are aged credit card debts sold for less than 5 cents on the dollar to collection agencies. When they’re sold, the buyer generally doesn’t receive any evidence of the debt and they cannot prove up the cases in court, but they still get thousands of judgments per year.

Last year the five largest Zombie debt collectors filed more than 5,600 of these cases in Jackson County. I had Ben Embry, my law clerk for the summer and a former KCUR reporter, do a random study of 200 of these cases. He found that in 95% of the cases defendants are not represented by counsel and in roughly 70% of the cases the plaintiffs obtain default judgments (excluding cases in which the defendant is not served).

In contrast, when Legal Aid and other private attorneys represent the defendants in these cases and ask the defendants to prove that they own the debt and prove that they are entitled to judgment, the Zombie plaintiffs routinely are unable to do so and dismiss their cases.

This summer the Zombie Debt Eradication Team, which consists of VAP attorneys: Dale Irwin, Bernard Brown, Amy Sweeney Davis, Michael Williams, Scott Bethune, David DeSimone and Jim Jarrow, along with Legal Aid attorneys Lisa Livingston Martin, Doug Tschauder, Amber Cutler, James Jenkins and myself drafted a proposed local rule that would require plaintiffs in Zombie Debt cases to file a copy of the assignment that gives them the right to sue with the Petition in their case—something that they have been unable to do in virtually every individual cases we’ve worked on.

Today, the Local Rules Committee of the Jackson County Circuit Court, the Honorable Justine Del Muro, Chair, met for an initial consideration of the rule. The Committee expressed interest in the proposed rule and Judge Del Muro indicated she would pursue it. I’ll keep you posted on what happens.