What to do if new collector re-ages old debt on credit report

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question Dear Sally,
I have an old credit card account that was charged off about eight years ago and in my state is “timed barred” due to the statute of limitations. Can it still be legally reported on a credit report by a third party collection agency?

This debt was reported in 2013 (I suppose when the collection agency bought it), and it shows on my credit report as a collection account with an open date of November 2013. That is the date that the collection agency opened their file, however, the last activity with the original creditor was in 2008. Should I challenge this? – Lou


Dear Lou,
A debt that old should have dropped off your credit report by now.

It sounds as if you really have two questions wrapped in one.

  1. How long can I be sued for a debt successfully? That’s determined by the whichever state statute of limitations applies to you. The statutes, and there is a different one in each of the 50 states, determine how long an unpaid debt is still a legally binding contract. State statutes of limitations for credit card debt generally run from three to 10 years. After that, debts become time-barred, that is, they’re too old for a creditor to use state courts to force you to pay up, assuming you show up in court and assert your rights.
  2. How long will an old unpaid debt stay on my credit report? That’s dictated by a federal law, the Fair Credit Reporting Act. It specifies how the dates of delinquency of debt are determined and when they can or cannot be changed.

Think of it as two clocks, running separately. One, the statute of limitation clock, can be restarted, extending the time you can be sued. The other, the credit reporting clock, cannot.

According to the Federal Trade Commission, a debt collector furnishing information to a credit bureau must report the date of first delinquency given to the collector by the original creditor. This date of first delinquency is very important, because it determines when the debt will stop showing on your credit report – generally seven years from the date of delinquency for debt not discharged in bankruptcy. (Debts discharged in bankruptcy can stay on your report for up to 10 years.)

When a debt changes hands, the law requires the new collector to attempt to determine the original date of delinquency, rather than just slap on the date when the debt was bought. They must use “reasonable procedures,” according to the FTC, to try to find the correct information. If they can’t find the correct date, they must report a date of delinquency before the date was referred to collection or charged off.

Years ago, collectors who bought debts often got away with illegally re-aging debts, by filling in a later date of delinquency and reporting it to the credit bureaus. Thankfully, that is rarer now.

You may re-age a debt yourself when you make another payment or another purchase on the account, or when you reaffirm the account by agreeing to make payments. Those actions may be a net positive. While re-aging extends the time you can be sued, it can bring  your accounts current, helping your credit score. But that action does not change the date on which your old debt should be purged from the credit report.

You should absolutely challenge this item on your credit report. One negative report such as this can make a big difference to your credit score and to how creditworthy you appear to prospective lenders and other people you may do business with. The fewer negative marks you have on your report, the more of a difference one negative mark makes.

Your first course of action is to make sure you have credit reports from all three major credit bureaus – Equifax, Experian and TransUnion. You can get the free reports at AnnualCreditReport.com. The three agencies often contain different information.

Send a letter to dispute with the credit bureaus that show the old debt information, and ask them to delete it immediately. You can use this sample letter from the FTC, if you want, or you can start from scratch. Save a copy for your records.

If the credit bureau does not remove the information from your credit report in 30 days, you can report the collector, the credit bureaus or both to the Consumer Financial Protection Bureau. You can find more information and submit a complaint on the Consumer Financial Protection Bureau website. Submit a separate complaint for each credit reporting company or collector that reports or refuses to remove erroneous information on your credit report.

See related: 10 surefire ways to get errors off your credit report, How do you tell when card debt legally expires?

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Updated: 01-19-2018