Zombie Debt Reassignment Method

Zombie Debt Reassignment Method

Reassignment Method Guide: Reporting

Time-Barred Debt Legally

The Reassignment Method involves sending a letter to the original creditor (OC) to reassign
the debt back to them after it has been purchased by a debt buyer (or after it has been in
default for a certain period). This method is used to make the time-barred debt "reappear"
as if it were a new agreement or an updated obligation. Here's how this process works,
especially in the context of data furnishing:

Debt Sale and Reassignment

Step 1: A debt buyer purchases time-barred debt (which means the debt is past the statute
of limitations for legal action). The debt buyer can reassign this debt, potentially with a new
agreement.

Step 2: The debt buyer sends a letter to the original creditor asking for reassignment, or to
"reopen" the debt. The letter requests the creditor to update the status of the debt and
report it back to the credit bureaus, now as a reopened obligation, not time-barred, and
showing active repayment.

The Letter
The letter to the original creditor must be clear about the purpose of the reassignment.

Example:
[Debt Buyer's Name]
[Debt Buyer's Address]
[Date]

[Original Creditor's Name]

[Original Creditor's Address]

Re: Request for Reassignment of Debt - Account # [Account Number]

Dear [Creditor's Name],

We are writing to request that you reassign the following account, originally reported under
[Account Number], to us as the current owner of the debt.

We would like you to update your records to reflect that we now hold the account, and
Zombie Debt Reassignment Method

request that you begin reporting it to the credit bureaus as an active trade line. Additionally,
please adjust the account's status to paid as agreed or closed as appropriate.

We understand the importance of accurately reporting credit information, and we intend to

report this account on the [Equifax, Experian, etc.] credit bureaus as a positive tradeline if
payments are made as agreed.

If you require any further information or documentation, please let us know.

Sincerely,
[Debt Buyer's Name]
[Contact Information]

Reassigning the Debt

Step 3: The original creditor must agree to the reassignment and update their records. They
should report the debt to the credit bureaus according to the reassigned agreement.

Step 4: If the creditor agrees to the reassignment and the debt buyer is able to successfully
re-report it to the credit bureaus, it can now appear on the consumer's credit report with a
new account status reflecting that it was re-opened or re-assumed under the new terms.

Important Considerations
- Statute of Limitations: The statute of limitations will still apply, meaning that if the
original debt was time-barred, the debt cannot be sued for repayment after the period has
passed. However, re-reporting it as a new tradeline could still affect the consumer’s credit
score.
- Compliance: The FCRA (Fair Credit Reporting Act) and FDCPA (Fair Debt Collection
Practices Act) still apply to ensure the debt is reported accurately, and it must be done in a
manner that is not deceptive or unfair to the consumer.
- Consumer Protection: The consumer must have been notified properly, and if they
dispute the debt, they are entitled to dispute the validity or accuracy of the new tradeline.

Ethical & Legal Considerations

The Reassignment Method is a legal strategy used by debt buyers. However, it can be tricky
if not handled properly, particularly when dealing with time-barred debts. Misreporting or
misleading the consumer or credit bureaus can result in penalties and legal challenges.
Full Disclosure is required — the new debtor (the debt buyer) should make it clear that the
debt has been purchased and that the original debtor may be entitled to dispute the amount,
terms, or reporting.
Zombie Debt Reassignment Method

Key Takeaway:
Reassigning the debt legally reopens the account, allowing it to potentially reappear on the
consumer's credit report as an active tradeline, but it must be done ethically. It is essential
to follow the proper steps and ensure full compliance with regulations, particularly the
FCRA and FDCPA. Always consult with legal professionals if you're unsure about specific
cases, especially for time-barred debt.

Why It’s Legal

Why the Reassignment Method is Legal
1. New Agreement with Original Creditor = New Rights Assigned
When a consumer submits a signed, notarized agreement requesting the original creditor
to assign the rights of a time-barred account to a new party (such as a data furnisher), it
becomes a legally recognized reassignment. This is not collecting on the old debt — it’s
creating a new authorization to resolve it through different terms.

• This is no longer a collection attempt by the original creditor, but a voluntary

reassignment backed by written consent.
• The consumer is actively participating and giving written approval — a key legal
factor.

2. Compliance with FCRA and Metro 2 Reporting Standards

As long as the data furnisher:

• Keeps all original dates intact (DOFD, charge-off, open date),

• Does not misrepresent the tradeline as new or re-aged,
• Clearly reflects the account as “Settled,” “Paid,” or “Closed with $0 Balance,”

— then the reporting remains fully compliant with the FCRA and Metro 2
standards.

3. Not Reopening Old Debt — Just Reassigning Who Can Report the Outcome
This method doesn’t revive the original debt. Instead, the consumer and creditor agree to
transfer the rights of resolution to another entity, who can report the outcome of that
resolution.

• The debt stays time-barred legally.

• The resolution (not the original delinquency) is what gets reported, with
transparency and accuracy.
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4. Legal Support and Acceptance

This method mirrors legally accepted practices such as reaffirmed debts in bankruptcy,
settlements with reporting rights, and structured credit arrangements.

The FTC, CFPB, and courts recognize that time-barred debts can be resolved voluntarily
— and reassignment agreements simply formalize that resolution legally.

Why the Reassignment Method Might Not Always Work

1. The Original Creditor Refuses to Participate
Even with a notarized request, the original creditor is not legally required to agree to
reassign the debt. Some institutions have strict policies that prevent them from modifying
or reassigning charged-off or time-barred accounts — especially if they’ve already sold
or written off the debt.

2. The Debt Was Previously Sold

If the original creditor already sold the account to a debt buyer or collection agency, they
no longer legally own the debt and cannot reassign it — even if they wanted to. In these
cases, the current owner (not the original creditor) must authorize any reassignment or
new agreement.

3. No Clear Chain of Title or Account History

If the account has changed hands multiple times or lacks clear documentation, it may be
difficult to prove legal standing or rightful ownership. The creditor may decline to engage
to avoid liability or confusion.

4. Payment or Consideration Wasn’t Offered

Sometimes creditors want a payment (even a small one) as a sign of “consideration” — a
basic contract principle — to validate the reassignment. Without offering this, some
creditors may view the request as incomplete or non-binding.

5. Legal Department or Compliance Policies

Larger creditors may automatically reject reassignment requests due to internal
compliance rules, legal risk concerns, or fears of re-aging accusations — even when the
method is legal and voluntary.
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6. Lack of Proper Formatting or Documentation

If the reassignment request letter is missing critical elements like:

• Notarization
• Account number
• Consumer signature
• A clearly worded consent clause

…the creditor may reject it or ignore it entirely.

7. The Consumer’s State Has Stricter Rules

Some states have additional restrictions or interpretations of reassigned or time-barred
debt, especially regarding how consumer consent is documented. If state law conflicts
with your process, it could lead to denial or even disputes.

Disclaimer and Legal Considerations

IMPORTANT DISCLAIMER:
The information provided in this document and in any associated resources is for
educational purposes only and does not constitute legal, financial, or credit advice. You are
solely responsible for how you apply any of the strategies discussed, and results may vary
based on individual circumstances and compliance with local, state, and federal laws.

Using the reassignment method, furnishing data to credit bureaus, or attempting to report
time-barred debt as a tradeline may or may not be effective depending on how the process
is handled, the documentation in place, and the willingness of the original creditor to
cooperate.

Data furnishers must ensure they:

- Maintain full compliance with the Fair Credit Reporting Act (FCRA),
- Avoid any unfair or deceptive practices per the Fair Debt Collection Practices Act (FDCPA),
- Obtain proper consumer consent and provide all required disclosures,
- Do not misrepresent the age, status, or legality of the debt.

This method relies on forming a new agreement, and in some cases, offering a payment or
settlement can help validate the legitimacy of the updated tradeline. However, payment is
not legally required unless it is part of the new contract and agreed upon by all parties
Zombie Debt Reassignment Method

involved.

Before proceeding, always consult with an attorney or compliance professional to verify

your specific use case is legal and enforceable.

By using any part of this information, you acknowledge and agree that you assume full
responsibility for your actions and their consequences.