Zombie Debts are Hounding Struggling Americans

October 16, 2019

Tens of thousands of people have received demands to repay alleged overpayments of government benefits – often decades old – plunging them into a Kafkaesque struggle against a faceless bureaucracy.

This is what happens when the government targets you for zombie debt collection.

You receive a letter from your state’s department of human services claiming that you were “overissued” $4,132 in food stamp and cash benefits in the 1980s. Enclosed is a copy of the original overpayment notice they say they sent you when you were still listening to Madonna and Bobby Brown.

You don’t remember ever seeing it before.

The letter informs you that, since you didn’t respond immediately three decades ago, your 90-day window to request a fair hearing and contest the overpayment has closed. You now have a debt, and it’s past due.

The state threatens to refer this debt to the United States Department of Treasury, which has the power to withhold your federal tax return, your earned income tax credit, a portion of your military retirement pay – even your social security disability check. You are barely making ends meet, so the financial loss might mean doing without meals, a utilities shutoff, or skimping on medication.

If they can’t get the money from you, they will withhold your adult children’s tax returns. You read this correctly: the federal government will take your children’s money to resolve a 30-year-old alleged public benefits overpayment.

You have few options if you want to avoid this: you can pay the whole balance immediately, set up a monthly payment plan, or request an administrative review. But the process is impossibly Kafkaesque: you have to send evidence that you don’t owe the debt, so you’ll need to find three-decade-old pay stubs and household expense receipts. And who can do that?

If you’re lucky, you’ll eventually argue your case in front of an administrative law judge. But she’ll work for the very agency that sent you the letter.

You have no right to free legal representation, so if you can’t find a legal aid or pro bono lawyer, you’re entirely on your own.

With quiet but devastating regularity, zombie debt notices are arriving at the homes of tens of thousands across the US – courtesy of the government and with the assistance of heavyweight tech companies. The Guardian can reveal that predatory policy changes, turbocharged by digital innovations, are producing a wave of aggressive debt collection that stretches back decades and targets the nation’s most vulnerable.

Read More

0 comment