When you owe a large amount of debt, you run the risk of becoming a target for untrustworthy creditors and debt collectors. Both the Fair Credit Reporting Act and the Fair Debt Collection Practices Act provide a legal framework for your rights and responsibilities as a borrower in debt. However, it’s important not only to fully understand these two laws but also to recognize potential illegal debt collection activities before they affect you.
Re-aging an account can be a confusing process because in some instances it’s legal and beneficial to you, while in other instances it can be extremely detrimental, not to mention illegal. We’ll walk you through the ups and downs of re-aged accounts and also help you identify other common tricks debt collectors may try to pull on you.
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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 delinquency is moved forward. 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 of 2016, or even later. This process can also be known as “curing” or a “rollback.” Sometimes this can help your credit score while other times it’s simply a way for collection agencies 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 re-aging occurs when you work directly with a creditor to make payments and minimize the damage done to your credit report. This typically comes as part of a debt repayment plan. That’s because your delinquent debt can still be reported as late each and every month, even if you’re making payments and trying to catch up. Each of these rolling late payments works against your credit score.
As part of a repayment plan, your creditor may agree to re-age the 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 an extremely useful and helpful way to get yourself out of a cycle of debt. You might also consider enrolling in a debt management plan so that your credit counselor can help negotiate the specifics of your agreement. In many situations, the creditor 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 debt under control.
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 collection agencies. These agencies pay mere pennies on the dollar to acquire these debts, and then attempt to collect and make a profit. Sometimes, unscrupulous collection agencies will “re-age” this newly purchased debt. This is a major problem for two reasons:
- It makes the debt look like a new debt that is delinquent, rather than the same old debt simply owned by a new creditor.
- It gives the collection company additional time to attempt to collect the debt, even if the debt is too old to legally collect.
The additional delinquency will cause your credit score to take another hit, and the revised delinquency date gives the credit agency a longer time to pursue the debt. 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 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, as the payment automatically renews the time that the debt remains on your credit report! This means a payment to a collection agency 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 the collection agency 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 accounts.
How to Dispute Re-aged Accounts
Unscrupulous practices like these are why it is so important to carefully monitor your credit report and to avoid dealing with any collection agency that uses high-pressure, unfair tactics to try to get you to pay. Most importantly, if the 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 and to send a certified “cease and desist” letter to any agency attempting to collect.
You can also petition the credit bureau directly. Start off by requesting relevant documentation from one or all of the credit bureaus. According to the FCRA, you have the right to view any information in your consumer file. Once you receive this information, 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 account has been illegally re-aged, you can open a dispute with the credit bureau to have the account completely removed from your credit report. Just note that if you’re still within your state’s statute of limitations, the collection agency may turn around and try to 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 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. Don’t let “re-aged” debt ruin your credit score or your chances for good credit.
Other Illegal Debt Collection Practices
Re-aging is definitely a shady tactic to keep an eye out for when dealing with debt collection agencies. But there are many other illegal practices to be aware of. Understand the most common ones so you can avoid being taking advantage of when you’re in debt.
Contacting Third Parties
Debt 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 agency does contact another third party, it can only be to try and find your whereabouts. But even this comes with a number of restrictions. Most notably, they cannot state that you owe any debt and may only identify their employer when asked.
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 you are being represented by a lawyer. 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, but luckily there is a legal line drawn in the sand to indicate when they’ve gone too far. They cannot lie to you, like pretending they’re from a law enforcement agency or refusing 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
There are also laws in place to protect you from unfair debt collection practices. A collection agency may not add any unauthorized fees or interest that weren’t included 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.
Navigating your way through the debt collection process may seem like a daunting process, but there is a way out. 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.