What is zombie debt and how do you get rid of it?

Paying off debt is a huge accomplishment and can feel like a weight lifted off your shoulders. So you might be confused — and maybe even a little scared — if you receive a letter notifying you that you actually still owe a debt you thought you had paid off. This is called zombie debt and it can occur for a handful of reasons.

Fortunately, there are a few ways to handle this scenario and in some instances you may not even need to pay a cent more than you already have. Below, CNBC Select explains what zombie debt is and how to deal with it.

• What is zombie debt?
• What should you do to resolve zombie debt?
• Bottom line

Zombie debt is any old debt that you thought was settled (or never knew about in the first place) that someone is now trying to collect on. Just when you thought you had paid off and buried that personal loan or medical debt balance, some debt collector has decided to bring it back from the dead — hence the term "zombie" debt.

Debt typically vanishes from your credit report seven years after you settle it, but resolved debts can sometimes be accidentally reported as unsettled when creditors sell debt to collectors. And sometimes zombie debt is the result of you forgetting about an old line of credit that's been sitting on your credit report unpaid.

Finally, zombie debt can happen when you're the victim of fraud or identity theft, and a scammer borrows money in your name without your knowledge.

First off, you should make it a habit to check your credit report for any negative items to minimize the risk of overlooking a debt.

This will also help you quickly catch any instances of fraud. Your credit report will show you what lines of credit you have open and which ones have been closed. If something looks unfamiliar to you, you'll want to look into it ASAP to make sure a scammer hasn't opened any accounts in your name.

Experian lets you access your credit report but it also has a credit monitoring service that lets you keep an eye on any potentially fraudulent activities. You'll receive alerts when it detects suspicious activity and you can submit disputes for any inaccuracies on your credit report directly through the platform.

If someone is trying to collect zombie debt from you, here's what you should do:

• Validate that the debt is legit by requesting that the debt collector send you a debt validation letter. This is simply a letter that proves that you owe a debt collector money and it usually indicates how much you owe and who the original creditor was. You'll want to check this letter against your own records in your credit report to make sure this debt belongs to you.
• If the zombie debt is a legitimate debt that you resolved in the past, you can write a letter to the collections agency asking that it stop contacting you, which the agency has to do thanks to the Fair Debt Collections Practices Act.
• If you don't think you ever owed the zombie debt, you should write a letter to the collector challenging its validity. This means the collector has to cease all contact until it can prove the debt is yours. Just make sure you do this within 30 days after the collector first contacts you, otherwise the collector will assume it is legitimate.

Things get a bit tricky if the zombie debt is both legitimately yours and you still owe payment. You might try to negotiate a settlement or a payment plan with your creditors. You can attempt to do this on your own, but you can also enlist the help of a debt relief company. Be sure you work with a legitimate organization, since the debt relief industry has its fair share of bad actors ready to take advantage of people in a desperate situation.

Of course, services through debt relief companies come at a cost but you can also compare fees before you commit to a service. CNBC Select ranked New Era Debt Solutions as the best overall debt relief company since it offers relatively lower costs compared to other debt relief companies (New Era Debt Solutions charges a fee that's equivalent to 14%–23% of the enrolled original debt amount).

Getting slapped with a letter for unresolved debt from your past can feel scary, but you don't need to let this zombie debt haunt you forever. Keeping an eye on your credit report is key to staying aware of what you do and don't owe and verifying whether zombie debt truly belongs to you.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit monitoring products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.