(NewsNation) — Zombie debt collectors are extracting huge amounts of money from bygone loans from homeowners nationwide.
According to Bloomberg News, the outlet identified more than two dozen firms that took over second loans belonging to at least 12,000 homeowners, several of whom were bereft of the means or wherewithal to obtain legal help.
“These ‘zombie debt collectors’ were among the most active in pursuing old second mortgages and faced lawsuits from borrowers who contested their efforts to collect,” said the outlet. “Hundreds of thousands more borrowers remain exposed on more than $32 billion of the old loans.”
A few of the examples the outlet uncovered included a debt collector demanding a Chicago man pay nearly $30,000 to settle a $10,000 second mortgage that he hadn’t heard about in 15 years; a San Francisco homeowner faced foreclosure over a $120,000 second mortgage despite receiving a document from his lender 16 years ago showing the debt was canceled.
So, how are these zombie debt collectors coming out of nowhere to cause havoc? A lot can be pointed to how President Trump’s administration gutted the agency tasked with enforcing consumer-protection laws.
As of October 2025, hundreds of thousands more borrowers remain exposed to more than $32 billion of the old loans.
What is ‘zombie debt’?
Zombie debts are characterized as old, forgotten or time-barred debts that reappear after a long period of inactivity.
The debts can include unpaid credit card bills, personal loans, medical debt or utility bills. So how do they arise? When collectors or collection agencies attempt to persuade people they still owe the debt.
“Debt collectors use aggressive or misleading tactics to collect on zombie debts. What’s worse, if a consumer acknowledges or makes a payment, it can restart the statute of limitations, giving collectors a legal foothold to sue for the debt,” said Bankrate.com’s Katherine Peach.
