It’s already stressful enough to deal with debt collectors. But it can be even worse if you have to worry about the collection agency changing the age of your debt.
Usually, financial debt doesn’t disappear or expire until the amount is paid, and old debts only appear on your credit report for seven years. However, collection agencies will sometimes wrongfully report delinquency dates as being more recent. This is known as “re-aging” the debt.
Collection agencies sometimes re-age old debt to pressure debt holders to pay quickly because the account will continue to affect their credit score. This can leave you wondering, “Can a collection agency report an old debt as new?”
On this point, the law is clear: Re-aging debt to mislead or pressure consumers is illegal. Collectors are not legally permitted to change the date of delinquency (the date on which a debt holder first missed a payment) on an account.
Of course, each time your debt transfers to another collection agency, the company will report a new open date for your account. This is normal and legal since the open date doesn’t affect how long the account stays on your credit report.
Disreputable collection agencies may illegally re-age debts to collect an amount you no longer owe. If a debt collector calls you about a debt you believe has already been discharged, you must never agree that you owe anything. Dispute the debt, saying, “I do not agree that I owe the debt.”
It’s also important to note that the age of your account is not based on the date of last activity (DLA), contrary to popular belief. Instead, it is based on your date of first delinquency. For this reason, it’s important to know the difference between these two terms.
The date of last activity is the most recent day that any activity affected your account details. Some people believe that this date affects the age of your account, and therefore they think that you shouldn’t make payments on an account in collections because doing so would reset the DLA.
However, this commonly held belief is incorrect. Collectors do not have the authority to adjust the DLA on an account. Only credit bureaus are permitted to change this important date.
Furthermore, unlike the date of first delinquency, the date of last activity will not affect your credit score negatively. Speaking with a knowledgeable attorney can help you understand how the DLA on your account could affect your case.
So can a collection agency report an old debt as new? The answer may seem like a simple “no,” but there’s a little more to the topic than it seems. As it turns out, there are some instances when the answer is not as straightforward.
The Fair Credit Reporting Act (FCRA) is a piece of federal legislation that regulates the collection, distribution, and usage of information relating to consumer credit. The FCRA sets standards for credit reporting agencies and establishes obligations for companies that rely on credit reports. The FCRA also regulates the behavior of individuals seeking credit and those denied credit based on their credit reports.
This important consumer-protection regulation is enforced by the Federal Trade Commission (FTC), which has the authority to take legal action against any company that violates the law. If you believe your rights under the FCRA have been violated, you may be able to file a lawsuit against the company for damages.
According to the FCRA, collection agencies may be able to report an old debt as new under the following conditions:
However, the FCRA requires credit reporting agencies and creditors to report credit information accurately. This includes reporting the age of the debt truthfully.
If a collector is reporting an old debt as new to mislead the credit reporting agencies or confuse you, it may be a violation of the FCRA. You should consult with an attorney to determine whether your debt holder is in violation of these important regulations.
The Fair Debt Collection Practices Act (FDCPA) is a federal law that specifies the permitted behavior of debt collectors when they are trying to collect from consumers.
The FDCPA applies to personal, family, and household debts. Common examples include:
The FDCPA does not specifically speak to the issue of whether a collection agency can report an old debt as new, but it does require collectors to provide truthful and accurate information when communicating with consumers about what they owe. In fact, it explicitly prohibits debt collectors from engaging in abusive, deceptive, or unfair practices when trying to collect a debt.
So if a collection agency is reporting an old debt as new for the purpose of deceiving the debt holder, it may also be in violation of the FDCPA. If you believe that a debt collector has violated the FDCPA, you can file a complaint with the FTC or sue the debt collector in a federal or state court.
If you are sued over a debt that is too old, the statute of limitations (a legal time limit) may provide you with a defense against the suit. According to the FDCPA, collectors are legally prohibited from suing borrowers if the statute of limitations has expired.
Most statutes of limitations on debt range between three and six years. Factors that may influence the timeline of the statute of limitations in your case include:
Determining the statute of limitations on an old debt can be complex, so it is helpful to consult with a legal professional in your state about how it is determined in your case.
For example, suppose that you receive a phone call from a debt collection agency representative, politely asking you to pay a minimal amount on your delinquent account. In return, they promise never to call you again. This may seem favorable, but it’s critical to remember that they do not have your best interests in mind.
In some states, paying on an old debt can reset the statute of limitations on the account. In other words, agreeing to pay even a small portion of your debt may extend the time during which the collector can sue you.
Beyond the FCRA and FDCPA, many state laws also regulate the collection of old debts and the behavior that is permitted by debt collection agencies. Some state laws provide additional protections for consumers in these situations.
Many debt holders can recover damages by filing a lawsuit against a collection agency that is in violation of state or federal regulations, reporting their old debt as new. Some of the most common examples of damages in these cases include:
You might also be able to seek an injunction requiring the collection agency to stop engaging in unlawful behavior. However, you cannot recover punitive damages in this type of case.
If you believe that a collection agency is illegally reporting your old debt as new, you should consider seeking the advice of a lawyer experienced in consumer protection regulations. An attorney can review your situation and advise you on the best course of legal action.
You might also want to consider contacting the FTC regarding the suspected violation and contact your state's attorney general's office to report the conduct of the collection agency. These two entities are responsible for enforcing consumer protection laws and may be able to take legal action against a collection agency if it violates them.
No matter the circumstances of your case, it’s a good idea to speak with a skilled legal professional to explore your rights and options. Do not allow an unscrupulous collection agency to wrongfully report your old debt as new.