Everybody is talking about zombie debtors today. I first heard the word on the BBC news bulletin early this morning. The lead story in the news was about the increasing number of people who are taking out short-term, very high-interest payday loans. The term zombie debtor refers to someone who is unable to pay off the capital of the loan, and whose repayments only service the interest charge. The loan will thus never be repaid.
Zombie debtor seems to be a recent term, but the term it comes from, zombie debt, is more established, and appears in online financial dictionaries. The dictionaries describe zombie debts as debts that the lender has given up hope of ever getting back. Often companies sell these debts on to debt-collection agencies.
The term zombie appears in other financial collocations. The term zombie bank has been around since the 1980s and refers to a bank with a negative economic net worth but which is propped up by government support. A zombie company cannot exist without regular bailouts. There are also the expressions zombie finance and zombie economics.
Comments