Definition of 'Zombie Debt '
A type of bad debt that is so old a person may have forgotten he or she owed it in the first place. The debt has likely been given up on by the company to which it was owed. Zombie debt can haunt a debtor if a debt collector buys the debt for a low price from the company in attempt to recover the owed funds.
Investopedia explains 'Zombie Debt '
If someone is being hounded by debt collectors for zombie debts that were either already paid off or were never incurred, action can be taken. Under the Fair Debt Collection Practices Act, a person can write a letter to debt collectors asking them to stop. At that point, debt collectors can contact the debtor only to notify him or her that they will cease or take a specific action.
Note that if you do owe money, the debt collectors can still take you to court to recover the funds, assuming that the time period from the last payment has not exceeded the juristiction's statute of limitations.