What You Need to Know About Debt Re-aging

If you have unpaid debt, we have good news for you. There is a time limit on how long you can be sued over that debt and how long it can appear on your credit report. If a collection agency suddenly asks you to repay an old debt, they could be resetting the expiration date, or statute of limitations, of the unpaid balance. This act, called debt re-aging, is illegal, as outlined by federal and state governments. We’ll break down all the who, what, how, and whys of debt re-aging and the best way to deal with it if necessary.

Tell me more about debt re-aging

You’ll hear the term statute of limitations when discussing re-aging. It means the same thing as it does when you’ve heard it mentioned in your favorite crime drama -- a validity time period. In the context of debt, it describes how long creditors can sue you over unpaid bills and how long the delinquency can appear on your credit report. After a certain period of time, which varies from state to state but is typically  6 to 10 years, you’re off the hook for what you owe. But if a collections agency suddenly reaches out about a years-old unpaid amount, re-aging may have taken place. This will have consequences for your credit score, which already suffered from the debt once. It’s also illegal, since it involves changing certain dates pertaining to your debt.

Why do creditors re-age debt?

Collections agencies re-age debt as a last ditch effort to get their money back. They’ve been trying for years to no avail, and they hope that a simple slip-up on your part will work in their favor. If they reach out to you and you acknowledge the debt and offer to pay it back, the debt is re-aged. As long as the agencies adhere to relevant laws, they are not rule-breaking by asking you to repay the debt. It’s up to you to know your rights and to make sure they are respected.

What makes debt re-aging illegal?

Once the statute of limitations passes, dates related to your debt cannot be changed. The Fair Debt Collections Practices Act lays out this and other regulations about debt collections, including when and how you can be contacted. This federal law applies, in addition to state laws, which dictate the length of the statute of limitations. State laws also regulate how the statute of limitations is defined -- for example, when you failed to make a payment versus when you last made a payment. You’ll need to research the various laws in your state, or consult a lawyer, to ensure you understand the stipulations surrounding your debt. The Consumer Financial Protection Bureau, a government agency that polices whether financial institutions treat their customers fairly, can also be a resource.

How can I combat re-aging?

If you’re contacted by a collections agency about an old debt, the best thing to do right from the start is not to acknowledge the debt or offer to pay it. Cease communications as quickly as possible and start researching whether the debt is still within its statute of limitations in your state. Gather payment invoices, original agreement paperwork, and your credit report to make sure your theories are backed by proof. Using Kredit, reach out to your creditor directly to confirm or refute details mentioned by the collections agency. If necessary and within your means, employ a lawyer to help with your case. If you do end up needing to go to court, be sure to cite the statute of limitations -- the burden falls on you to do so. The collections agencies have lack-of-knowledge advantage here, and it’s up to you to make sure it doesn’t help them build their case.

Do I have legal alternatives?

There are numerous government offices and agencies that would like to know which companies are re-aging debt. If, after you’ve created a paper trail and done sufficient research, you suspect you have been a victim of re-aging, you should share the name of the company at fault to the Consumer Financial Protection Bureau, the Federal Trade Commission, and your state’s attorney general. As a last resort, you also have the ability to sue the collections agency for violating federal and state laws. Just know that taking legal action could be pricey.