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The Dark Side of Debt Re-aging


When you are dealing with debt collectors, it's essential to stand up for yourself and remember that your rights are protected by federal law. Debt collectors like to intimidate debtors by making them feel like they play fast and loose with standards of debt repayment. Yet in reality, it is often the debt collectors who play fast and loose with the law. Debt re-aging is a great example of this.

Re-aging a debt is exactly what it sounds like. Debts "go bad" when you stop paying them, and they're reported on your credit report as having "gone bad," which adversely affects your credit rating. It's important to note that legally, the date a debt goes bad is 30 days after the date of your last payment. Say you have a bill due on December 15. You last paid on November 15. December 16 rolls around and you haven't paid. At this point the debt can legally be reported as "30 days past due" even though in a way your payment is only one day late.  (Seems kind of unfair, but that's how it works.) What will happen sometimes when debt collectors buy a debt from a debtor is that they will "re-age" the debt, that is, they will change the date the debt "went bad," usually to the date when they bought it from the original creditor.

It's important to understand this because this can cause a late payment to injure your credit profile more seriously than it ought to. So in our example of the December 15 payment missed, say the creditor sells the debt to a collection agency on June 15 of the following year. The date the debt went bad is still legally November 15, but debt collectors like to reset the date to appear as the date when they bought the debt. This is unfair to you because, as you probably know, negative information falls off your credit report after a certain amount of time. In the example above, if the debt collector resets the date of the debt to June 15, you will have to wait 7 more months for the information to fall off your credit report.

The situation becomes even more extreme in cases where a debt is 7 years old, it falls off your credit report, only to be added again by a collection agency that has purchased the debt. That means 6 or 7 more years of that information staying in your credit report! If this happens to you, you need to complain to the Credit Bureaus and get them to remove the information from your credit report. Remember that more recent defaults hurt your profile and score more than older defaults. The timing of debt reporting is therefore crucial. Using debt re-aging in this abusive fashion is not only unfair, it is illegal. If you can't get the debt collector to remove the information, you may need to consult a lawyer, as this could be grounds for a lawsuit under the Fair Credit Reporting Act.

If you have a very old negatively reported debt on your credit report, remember that it will have to be removed from your credit report after a certain amount of time. In the meantime, DON’T MAKE ANY PAYMENTS. Making payments can look like you "revived" the debt.  Watch your credit report like a hawk, especially as you prepare to make major credit-related decisions, like purchasing a home through a mortgage. If a debt collector tries to re-age a debt on your report once it should have fallen off under Federal standards, you have grounds to sue the debt collector, and you will be awarded damages if you can prove injury.

Are you sick of dealing with debt collectors? If you are buried under a mountain of debt and are seeking peace of mind, remember that filing for bankruptcy protection can allow you to start anew. Call the Law Offices of John T. Orcutt today for a free initial debt consultation. +1-919-646-2654.

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