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Every consumer is entitled to an accurate credit report that reflects their actions. This means negative items, including collection accounts, must have the correct date and should “fall off” a credit report after the allowable time (typically seven years). Some lenders and collection agencies try to keep a debt around longer with an illegal practice known as re-aging collection accounts. This is when the date an account first became delinquent is changed so the item can stay on someone’s credit report longer.
We’ll explain debt re-aging in more detail, and then we’ll cover how it’s different from the statute of limitations on debt collection, which it sometimes gets confused with.
Is re-aging a debt legal?
Re-aging collection accounts without permission is not a legal practice and is prohibited by the Fair Debt Collection Practices Act (FDCPA). Lenders and creditors are legally required to provide accurate information to be added to a consumer report. A debt is added to your credit report from the first day it went delinquent and can only stay on your account for a specific amount of time.
Despite it being illegal, some creditors and lenders attempt to re-age accounts so they have more time to try to collect on a debt from a consumer. Sometimes when a collection agency purchases a debt, they try to report a new date when they don’t know the original delinquency date of the debt.
Re-aging is typically a bad thing for consumers, but there’s a type of re-aging that is legal and can potentially benefit a person. For example, let’s say a consumer who has a track record of making their payments loses their job and misses two months’ worth of payments. They now have a delinquency on their report. This consumer can reach out to the lender and ask that they update their account to say “current” and delete the record of their missed payments.
If the lender agrees to do so, this type of re-aging can positively impact the consumer’s credit report. However, lenders are usually only willing to do this type of favor for people who have a history of staying up to date with their lenders. Re-aging is legal in this situation because the consumer initiates and consents to the change.
How to know a collection account has been re-aged
You won’t be notified when an account has been re-aged. Instead, you have to monitor your credit reports and keep a keen eye out for any changes. Consumers are entitled to a free credit report from each of the three credit reporting bureaus once every 12 months. Make sure to take advantage of this benefit by ordering and reviewing your reports regularly.
What is the statute of limitations on debt in collections?
The statutes of limitations on debt collection are the laws that dictate how much time a creditor or debt collector has to legally file a lawsuit against a consumer in an attempt to collect an outstanding debt. The exact statute of limitations for a debt can vary depending on the type of debt and state laws. In most states, the statute of limitations averages between three and six years for debts and starts from the day of the first missed payment.
When the statute of limitations on a debt has passed, that doesn’t mean the debt is forgiven. Debt collectors can still try to collect the debt from you and may even try to sue you. However, you can have the case dismissed by showing the judge that the statute of limitations has passed. (Note that you should still show up to court if this happens, as the case won’t automatically be dismissed.)
The statutes of limitations on debt are different from the rules that determine how long a debt can stay on your credit report. On average, most negative items can remain on your credit report for seven years. The clock starts on the first day of delinquency and legally shouldn’t be modified, as opposed to a debt’s statute of limitations, which can change.
Can the statute of limitations on debt be reset?
A consumer can accidentally reset a debt’s statute of limitations by doing something like making a partial payment on the debt. In some states, simply acknowledging that the debt is yours is enough to reset it. The specifics of what triggers resetting a statute of limitations for a debt varies from state to state.
In general, consumers are advised to never speak with debt collectors about old debts. These collectors are often trying to get you to take some action that will reset the statute of limitations and allow them to sue you for the debt once more. But note that even if the statute of limitations is reset, the collection account still shouldn’t stay on your credit report for more than seven years from the first missed payment.
Steps to take if an account in collections has been re-aged
If you realize that you’re dealing with an account in collections that’s been re-aged, follow these steps:
1. Gather documentation
The first step is to gather documentation from your creditor or collection agency, your credit report, and any other information you may have on your debt. Make sure to collect a debt validation letter from the original lender that includes dates, the amount owed, the payment history, and other relevant details. You’ll need to provide copies of your documents so you can prove the account has been re-aged unfairly.
2. Determine the dates for the debt
Once you have all the documentation, you can determine the Date of Last Activity (DOLA) on the account. If your debt has been resold, you must contact the original creditor to determine the accurate DOLA. Make sure the DOLA from your original creditor and your credit report match—if they don’t, this is proof that the account has been re-aged.
Next, you’ll want to determine the deadline for the account to fall off your credit report. For example, collection accounts are removed from your credit report after seven years. If your account has been re-aged and is showing up on your account even though it’s been seven years since the DOLA, this is an additional problem. In this case, not only do you want the DOLA updated, but you’ll also want the account removed from your report, as the maximum time frame has already passed.
3. Send a dispute letter
Next, you’ll want to start a dispute with the relevant credit bureau to have this account updated to reflect its correct information. Provide them with copies of all the documentation you have, including the debt validation letter, and ask that the account details be fixed.
The credit bureaus will investigate your dispute and ask the creditor to provide its proof. As the creditor will be unable to do so, the account should be updated and your credit report should be fixed.
If you don’t want to go through the dispute process on your own, consider enlisting professional help. The credit repair consultants at Lexington Law Firm can help you with the steps, from reviewing your credit report to filing a dispute and tracking its progress with the credit bureaus.
4. Report the re-aged account to the CFPB, FTC and state attorney general
This last step is optional but highly recommended. The creditor that re-aged your account did so illegally and may be doing the same thing to others. It’s important to report these types of actions to the appropriate places so they’re stopped from doing so again in the future. You can file a complaint with the Consumer Financial Protection Bureau (CFPB) and the state attorney general and file a report with the Federal Trade Commission (FTC). The creditor may be subject to fines and other legal consequences for its actions.
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