MILWAUKEE (WITI) -- "Zombie Debt" sounds like a Hollywood horror film -- but it became a real-life nightmare for the people faced with it. If you think you've paid a debt, or are not responsible for a debt anymore, that may not be the end of the story. There are companies that specialize in bringing dead debt back to life and haunting people's credit.
Bret Eulberg owns a jewelry store in Greenfield, selling precious metals and rare gems. They are expensive items, so Eulberg knows a little something about customer financing and consumer debt.
But of course, as a business owner, Eulberg spends money too. In 2006, he bought two Dell computers for the office for about $1,700.
The debt was paid shortly thereafter, and he didn't think about it again for six years.
"All of a sudden, there's this company called Midland Funding saying they bought debt from Dell," Eulberg said.
Midland Funding bills itself as "one of the nation's biggest buyers of unpaid debt." It's a so-called junk debt collector -- trying to get money owed years ago, or in some cases, debt that has already been paid or disposed of -- like Eulberg's computer debt.
It's called "Zombie Debt."
"I did have a debt come back from the dead to attack me," Eulberg said.
In Wisconsin, debt from contracts like credit cards dormant for six years or more, debt discharged through bankruptcy and debt already paid is supposed to be off-limits.
However, consumers say the rules designed to protect consumers from unfair collections are being broken by collection companies and their attorneys.
"Midland has been using tactics that are basically fraudulent and illegal. I opened the door and an envelope was thrown at me, and the guy said 'you've been served' and left. It was a debt collection summons for court. I had no idea why I was being brought to court. Supposedly, it was a debt that I owed, right under $5,000 dollars, it was a company that I never had a card with," Sherry Storm said.
Storm, of Milwaukee, was hounded for a bogus debt all the way to small claims court, and watched as her credit history was ruined.
"The whole process is humiliating, it's intimidating and it provokes a lot of anxiety," Storm said.
In Storm's case, it was an error, and she was able to prove the debt was not hers.
"These collectors usually are buying old debt from companies that may or may not have really existed, may or may not have the correct account number, may or may not have the correct debtor," Storm said.
Last year, Midland Funding agreed to change its practices after the state of Minnesota accused it of filing unreliable court papers and carelessly targeting people for debts they didn't owe.
The Attorney General was furious over a practice called "Robo-Signing."
"Someone in a room signing affidavits, swearing that they know this debt is correct," Storm said.
It appears that happened to Eulberg, when he was served with a lawsuit containing an affidavit allegedly signed by the president of Dell -- trying to collect the computer debt he had paid years ago -- and the suit started on Page 47.
"Nothing from 1 to 47, and it's like yeah, the president of Dell is actually going to sit there and sign off and say, 'Bret Eulberg owes this debt.' It's like, 'come on.' What bothers me is right away, they attack your credit. What they do is charge you interest on this debt that doesn't exist," Eulberg said.
The company may simply be "fishing for information" that it can use against you. So Eulberg submitted a series of questions to them, asking that they prove the chain of custody of the debt, and that the president of Dell did indeed sign off on the affidavit.
"When I submitted these questions back to the lawyer, the lawyer dropped the case," Eulberg said.
Records from Wisconsin courts show hundreds of cases involving Midland Funding. Neither Midland, nor the lawyers that represent them even responded to FOX6's requests for comment.
"They're a big machine. They're a very big machine. They have a lot of money," Storm said.
Most consumers lose their lawsuits by default.
"What they originally wanted to do was get a default judgement. In other words, overwhelm you. If you don't show up for court, or if you're afraid, and you don't have an attorney," Storm said.
So they key is to show up to court. Don't ignore letters from collectors. Instead, send back a letter of dispute, and make the company prove you owe the money. And if you have to, hire an attorney of your own.
Eulberg is happy to have the real-life horror taken care of. It took seven months to prove he didn't owe an "un-dead" debt.
"It is a debt from the dead. It should have been dead and gone and it haunts you," Eulberg said.