What Can Re-age an Account, and How Does it Affect My Credit?
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One of the fundamental tenets of our legal system is expressed in what is called the “statute of limitations.” This is a term heard in both civil and criminal litigation, and it refers to a certain amount of time that someone has to bring an action against another party.
Most creditors and debt collectors have a set time during which they may file suit to collect a debt. It varies depending on the state and there are some exceptions, such as in the case of federal student loans. But a statute of limitations doesn’t prevent a creditor or collector from trying to collect on the debt outside of court, and that’s where the term “re-aging” comes into play.
What is re-aging, and what might re-age a debt?
Re-aging is when the date of a delinquent account is changed, restarting the seven-year timeline for it to drop off your credit reports.
Let’s say you have a delinquent debt that's beyond the statute of limitations. A collector contacts you about what you owe. If you make a payment of even a dollar, or so much as say over the phone that you’ll pay, you may trigger “re-aging” — which starts the statute of limitations clock all over again.
You may be past the time you can be sued, and the debt may even have fallen off your credit report. But certain actions can revive a debt that's "time-barred" or past the statute of limitations. It’s also possible that an unwitting spouse may restart the clock by promising to pay or making a payment.
If a debt collector calls about an ancient debt, here are possible ways to respond:
Know your rights. Familiarize yourself with the rights you have under the Fair Debt Collections Practice Act and seek legal advice if needed.
Determine whether the debt is yours. You should receive a debt validation letter explaining the amount owed and other pertinent details.
Challenge it. If the debt isn’t yours or you already paid it off, you can challenge the debt by writing a dispute letter to the creditor.
Pay it off. If the debt is yours and you want to pay it off, be aware that even a small payment on a time-barred debt may reset the statute of limitations.
Discharge through bankruptcy. If the debt is valid but you can’t afford to pay it off, one option is to discharge the liability through bankruptcy.
Ignore it. You can’t be sued for payment if the debt is time-barred. But your credit report will still take a hit and debt collectors may continue to seek payment.
How does re-aging impact credit reports?
A bad debt usually stays on your credit reports for seven years. The date of the delinquency, or when the payment initially went 30 days past due, is the date that gets reported. So you’re going to be dinged for a long time.
But keep an eye out for collectors trying to revise the date of delinquency in order to reset the clock. For example, some debt buyers will use the day they purchased the debt as the last date the account was active when reporting to the credit bureaus — thereby re-aging your account. That’s illegal.
You have the right to free, weekly credit reports from the three major credit bureaus — Equifax, Experian and TransUnion — by using AnnualCreditReport.com.
How to fix re-aged debt
To fix a debt that was re-aged improperly, use the dispute process to contact the credit bureau or bureaus involved. Be prepared to provide copies of your records to prove it. These records include the debt validation letter that collectors are required to send you, which details the age of the debt and the amount owed, among other things.
Credit bureaus must investigate the issue and forward your information to the debt collector. Then the debt collector must investigate and report back to the bureau.
That should be enough to make debt collectors withdraw their re-aging attempt. If not, you can report them to the Federal Trade Commission. You can also complain to the Consumer Financial Protection Bureau. Collectors risk a fine for each incident.
