Getting Zombie Liens Release Car Titles, Real Estate, Judgments

  • July 11, 2024
  • 7 min read

Today we’re going to talk about zombie debts. What is a zombie debt? It could be a mortgage, it could be a judgment, it could be a lawsuit. It’s something that was a debt against you that you thought was long gone. Could be a car loan that maybe you had many, many years ago. Maybe it was in collection, maybe it was a charge off, maybe it was a judgment that you thought was gone.

The Resurgence of Zombie Debts
The one key thing, the one common element that we hear when we hear about these zombie debts is, “I haven’t heard anything for so long, for 5 years, seven years, 10 years. Nobody called me, nobody tried to collect, nobody tried to take my house, take my car.” And then all of a sudden you either get a phone call or you try to get credit or buy something and you find out that that zombie debt is still out there.

Case Study: Yahoo Finance Article
This article in Yahoo Finance is about a woman who had a mortgage on a property, a second mortgage from a long time ago that she thought was forgiven, right? And all of a sudden you get a debt collector trying to bang on your door to try to get money from you, right? How does that work?

How Zombie Debts Work
Well, the way it works is if you have a debt, unless the debt is very formally released—not forgiven, not charged off, released—that debt still has the risk of being collected. Now remember, we’re not attorneys, we’re not giving you legal advice. We’re a licensed private investigator and a certified civil court mediator, so we do see these cases all the time.

Debt Collection Process
What happens is the original lender, let’s say it’s a major bank, Chase Bank, Wells Fargo, whatever, once they realize they’re not going to get the regular payments from you that they’re supposed to, they will now sell that debt for pennies on the dollar to a debt collector or collection agency. They have to write it off their books at the original lender. So the original lender, it’s off their books. Now the debt collector can buy it for basically nothing. They can sit on it for a number of years. It didn’t cost them that much. If the debt was $100,000, they might have paid $200 for the debt. They can sit on it for as long as they want. Then all of a sudden they can come back and say, “Now we’re going to start trying to get the money.” It’s all pure profit for them because it cost them basically nothing to buy it.

Validity of Zombie Debts
Because of the fact that that debt is still recorded somewhere—on the property deed in the land records, against a car title, in a judgment in a civil court record—it’s now valid for them to collect. So what you want to do is if you have a debt that’s out there, you want to request a lien release or judgment release or a mortgage release from the original lender, not from the debt collector, because the debt collector may or may not be able to legally sign a release because their name is not on the original debt, right? They’re just like a vendor.

Requesting a Lien Release
And the way to do that is very important. You want to do it formally in writing using a very specific type of lien release package. And you can click our link below for which gives you instructions on how to do it. You don’t want to do it by phone, you don’t want to call up the lender and say, “Hey, can you get me a lien release?” You don’t want to text message them.

Email and Paperwork
Email them because it won’t work. Unless they have actual paper that they can sign off on, they’re not going to take the time to write up the lien release. They’re not going to take the time to write up all the paperwork that’s needed because they already lost money on you, right? You charged off their debt, so they’re not going to take the time to do the work. In fact, even if the person who is responding to you doesn’t really care about the debt, they’re not going to stop their regular job, drop everything they’re doing to write up paperwork for you. That’s just not convenient.

Ease of Signing Documents
But if you prepare all of the documents that are needed, that they have to sign, mail it to them in writing with a return envelope, and ask them to sign it because it’s a charge off, it makes it easy for them. All they have to do is sign it and send it back. Even go so far as to put a stamp on the envelope. That’s how we do it. And once you get it, now you can file it with wherever that original lien is—in the land records, in the civil court judgment, on the car title—to release that lien, to release that mortgage, to release that debt, that judgment.

Legal Cases and Charge Offs
And many times the lender will also sign it because the person who gets it is an administrative clerical person. They’re not the actual person that is owed the money; they don’t really care. Also, some legal cases have been filed that say if you have a charge off or a write off, you’re not allowed to keep that recorded debt. Again, we’re not trying to give you legal advice like an attorney, but we have seen some court cases where the court has said to the lender, “No, you can’t hold a lien against somebody if you already charged off the loan. You can’t do both. You charge it off, you can’t have cake and eat it too.” So many lenders know that. They say, “We better sign this so we’re not violating anybody’s rights.”

Final Steps
So that’s the only way to do it: send a package. Don’t try to call them, email, Facebook, text message, any of those things. It won’t work. You have to do it in writing. And the other thing we recommend is when you send that in writing, don’t just send it to one place. Send it to four or five different locations for that lien holder. Even if it’s a judgment creditor, somebody from a lawsuit that has a judgment against you, find their registered agent in their corporation, find an alternate authorized signer, send it to them. Many times they’ll just sign it and send it back.

Proof of Effort and Legal Recourse
Now, if they won’t, now you have proof that you at least tried to contact them. So you may be able to now take it and file a court order to have it removed because they’re not taking action, right? Again, get good legal advice from any of these things, but if you do have a zombie lien or zombie loan or zombie mortgage, take some steps, make some effort to try to get it released and removed. Just make sure you’re not going to do anything that causes more harm or damage, like makes you owe more money or does something to threaten anybody or intimidate somebody. Do it the right way, but you don’t want to have that zombie loan hanging out there because you never know when it’s going to pop up and it could cost you money at the worst possible time.

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