The Fair Credit Reporting Act (FCRA) sets very strict guidelines regarding how long damaging information is allowed to remain on your credit reports. This is designed to help consumers who have made credit mistakes in the past, but also opens up the door for creditors to take advantage of a process known as “re-aging” a debt.
Consumers may not be aware, but most negative items reported on your credit score have a statute of limitations for how long they can remain on your credit reporting. Some creditors rely on consumers not knowing this and will purchase old debts and attempt to “re-age” them.
What Is Debt Re-Aging?
Debt re-aging is a complicated industry term that can have several applications but for the purposes of this article, debt re-aging is simply when a creditor attempts to revive and collect on an old debt.
In most cases, negative information on your credit report is required to be purged from all of your credit reports after a certain period of time. The mistake most people make is engaging with creditors who are looking to re-age a debt and in turn, reset the clock on when their debt can age out.
Oftentimes, this is done by creditors purchasing an old debt and changing the date when the debt went bad. Other times, it relies on the consumer admitting ownership of the debt itself, well after the statute of limitations is past. Both of these practices can reset the clock on the statute of limitations on your debt and can put you back on the hook for paying back old debts.
Is Debt Re-Aging Illegal?
While the practice of debt re-aging isn’t always illegal, many debt collectors use the practice in an unethical fashion. They rely on the consumer to admit ownership of old debt, so they can “re-age” the debt and reset the statute of limitations on collecting the money that is owed.
Consumers should be very careful about what they say if contacted by a debt collector about an old debt. Debt collectors looking to re-age old debt often rely on consumers to say or sign something acknowledging of the validity of the debt. If you do this, even after the statute of limitations on that debt has expired, then you may have revived, waived, or extended the statute of limitations and will now be on the hook for repaying it.
How Can I Avoid Debt Re-Aging?
Know the Statute(s) of Limitations
The statutes of limitations vary from state to state but information about how long your debt is valid for can be found online. If a creditor is contacting you about an old debt, the first step is to check that you can still be legally held responsible for it.
Do Not Claim Ownership of the Debt
Claiming to have knowledge or ownership of an old debt is the quickest way to have your debt re-aged. In most cases, it is in your best interest to say nothing to a creditor looking to collect on a debt that is past the statute of limitations. If a creditor plans on moving forward with attempting to collect anyhow, they are required to contact you with their next steps. Oftentimes however, creditors will drop the issue if they cannot confirm ownership of the aged-out debt and re-age it.
Watch Your Credit Report
Unethical creditors will often report old debt as new in an attempt to scare consumers into making payments. This is illegal and could be seen as a violation of the Fair Credit Reporting Act (FCRA) and should be reported.
Write A Credit Dispute Letter
If a creditor is coming after you for a debt that has aged out or is claiming an old debt is new, you should send a credit dispute letter in response. A credit dispute letter is a letter sent to the credit bureaus disputing damaging information on your credit report. Once the letter is submitted, it is up to the creditor to prove the debt they are attempting to collect on is valid.