When you owe a large amount of unpaid debt, you risk becoming a target for untrustworthy creditors and debt collectors.
The Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA) provide a legal framework for your rights and responsibilities as a borrower in debt.
However, it’s important to fully understand these two federal laws and recognize potential illegal debt collection activities before they affect you.
Re-aging debt can be a confusing process because, in some instances, it’s legal and beneficial to you. However, in other instances, it can be detrimental, not to mention illegal.
We’ll walk you through the ups and downs of re-aged accounts. We’ll also help you identify other common tricks debt collectors may attempt to pull on you.
What is Debt Re-aging?
What does it mean when a debt is re-aged? For credit reporting purposes, a debt is considered re-aged when the date of first delinquency is moved forward. So, for example, a debt that was originally past due in August 2015 may be “re-aged” to show that it was originally past due in August 2016 or even later.
This process can also be known as “curing” or a “rollback.” Occasionally, this can help your credit score, while other times, it’s simply a way for debt collectors to gain more time in collecting payments from you. Let’s break down the details into two different categories: positive re-aging and negative re-aging.
Positive Account Re-aging
Positive re-aging occurs when you work directly with a credit card company or lender to make payments and minimize the damage done to your consumer credit reports. This typically comes as part of a debt repayment plan.
That’s because your unpaid debt can still be reported as late every month, even if you’re making payments and attempting to catch up. In addition, each of these rolling late payments works against your credit score.
“Paid On Time”
As part of a repayment plan, your creditor may agree to re-age the credit account so that it is reported as “paid on time.” They can either bring past payments up to date or re-age all your payments going forward.
This is a helpful way to get yourself out of a cycle of debt. You might also consider enrolling in a debt management plan. A credit counselor can help negotiate the specifics of your agreement.
In many situations, the credit card companies will agree to re-age your accounts once you’ve made a few consecutive months of on-time payments. It’s a good incentive for both parties to actively get your unpaid debt under control.
Negative Account Re-aging
Unfortunately, there is another type of “re-aged” debt. When your past-due bills are charged off by the original creditor, they are oftentimes sold to debt collectors.
These collection agencies pay mere pennies on the dollar to acquire these debts. Then, they attempt to collect and make a profit. Sometimes, unscrupulous debt collectors will “re-age” this newly purchased debt. This is a major problem for two reasons:
- Re-aging makes the debt look like a new debt that is delinquent, rather than the same old debt simply owned by a new creditor.
- Re-aging gives the debt collector additional time to attempt to collect the debt, even if the debt is too old to legally collect.
The additional delinquent account will cause your credit scores to take another hit, and the revised delinquency date gives them a longer time to pursue the debt.
Illegal Debt Re-aging
While this type of “re-aging” is illegal, there is no simple way for the average consumer to get immediate relief from this type of unfair practice. But you can take steps to prevent further damage to your credit score and avoid reopening the statute of limitations.
If you’ve made a payment on one of these “re-aged” debts, it can be almost impossible to have the matter corrected. This is because the payment automatically renews the time that the debt remains on your credit report!
This means a payment to a debt collector can leave you with a delinquent debt that cannot be removed for another 7 to 10 years if it is not paid off.
It also reopens the statute of limitations on the amount of time they may pursue repayment from you. The timeframe varies from state to state but generally lasts between three and seven years. Clearly, it’s in your best interest to monitor your credit report and fight back against illegally re-aged collection accounts.
How to Dispute Re-aged Accounts
Unscrupulous practices like these are why it is crucial to monitor your credit report and credit score carefully. It’s also important to avoid dealing with any creditor or collection agency that uses high-pressure, unfair tactics to attempt to get you to pay. Most importantly, if the unpaid debt in question is too old to collect based upon the laws of your state, do not offer to pay.
It is in your best interest to state that the debt is past the statute of limitations for collections. You may also want to send them a certified “cease and desist” letter.
Credit Bureau Disputes
You can also file a dispute with the credit bureaus directly. Start by requesting your free credit report from one or all three credit bureaus. According to the FCRA, you are entitled to view any information on your credit report for free once every 12 months.
Once you receive your credit report, you can compare the date of first delinquency from the original creditor to the new delinquency date provided by the collection agency.
Assuming these documents show proof that your collection account has been illegally re-aged, you can open a dispute with the credit bureau. A successful dispute will result in the collection account being completely removed from your credit report.
Hiring a Credit Repair Professional
Credit repair companies can help you challenge inaccurate negative items to potentially get them removed from your credit report. These items can include late payments, collection accounts, charge offs, foreclosures, bankruptcies, and more.
Credit Saint offers credit repair services, and has been working with people on their credit for many years. They have experience dealing with collection agencies, creditors, and the credit bureaus. They also offer a free credit report consultation, which includes a review of your credit report for free. Visit their website to learn more.
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Learn how credit repair professionals can assist you in disputing inaccuracies on your credit report.
Potential Legal Action
If you’re still within your state’s statute of limitations, the collection agency may turn around and sue you for the amount owed.
In addition to disputing the re-aged account with the credit bureau, you should also file a complaint with the Federal Trade Commission (FTC), your state’s attorney general, and the Consumer Financial Protection Bureau.
If the collection agency states that the falsely re-aged debt is legitimate, you may be able to sue in a small claims court for violating your rights. So don’t let “re-aged” debt ruin your credit scores or your chances of having good credit history.
Other Illegal Debt Collection Practices
Account re-aging is definitely a shady tactic to watch out for, but there are many other illegal practices to be aware of. Understand the most common ones so you can avoid being taken advantage of when you’re in debt.
Contacting Third Parties
Collection agencies should not contact anyone besides yourself about your amounts owed, with just a few exceptions allowed. Those include your attorney, the credit bureaus, and the original creditor.
They can also contact your spouse and your co-debtors unless you have already sent a letter with a request that they stop contacting you.
If the debt collector does contact another third party, it may only be to attempt to find your whereabouts. But even this comes with several restrictions. Most notably, they cannot state that you owe any debt and may only identify their employer when asked.
Contacting You
There are also legal restrictions on when and where a debt collector may contact you. Usually, any time before 8:00 a.m. or after 9:00 p.m. is off-limits.
They also can’t call you if they know a lawyer is representing you. Calls at your place of work are also forbidden once you tell them your employer prohibits personal phone calls on the job.
Exhibiting Inappropriate Behavior
Some debt collectors are known to get nasty. However, fortunately, there is a legal line drawn in the sand to indicate when they’ve gone too far. They cannot lie to you. For example, they can’t pretend they’re from a law enforcement agency or refuse to say anything about who they are.
Additionally, a debt collector may not use profane language or threaten you with violence. They also can’t publicly list your debt for sale or publish your name in relation to your debt. If you experience any of this type of behavior, it’s time to contact the authorities.
Using Unfair Collection Methods
A collection agency may not add any unauthorized fees or interest that they didn’t include in the original credit agreement.
Moreover, they can’t threaten to take your property if they’re not legally allowed to do so or if they actually have no intention of doing so. They’re also required to handle postdated checks in a very specific manner.
Know your rights and debt collectors’ rights, so you understand when is the time to stand up for yourself. Once you know where the line is drawn and whom to contact, you’ll feel much more empowered as you work your way out of debt.
