Can a Collection Agency Report an Old Debt as New?

Dealing with debt can be stressful, especially when an old debt suddenly reappears on your credit report as if it’s brand new. You may wonder, “Can a collection agency report an old debt as new?” This question is common among consumers navigating the complex world of debt collection and credit reporting. In this blog post, we’ll explore the rules surrounding debt reporting, the tactics some collection agencies may use, and what you can do to protect your financial reputation. By understanding your rights and the regulations that govern debt collection, you can take control of your credit and avoid potential pitfalls.

Understanding Debt Collection and Credit Reporting

Before diving into whether a collection agency can report an old debt as new, it’s essential to understand how debt collection and credit reporting work. When you fail to pay a debt, such as a credit card balance or medical bill, the original creditor may sell or transfer the debt to a collection agency. This agency then attempts to recover the owed amount. To pressure you into paying, the agency may report the debt to credit bureaus like Equifax, Experian, and TransUnion, which can negatively impact your credit score.

Credit reports include details about your debts, such as the date the account was opened, the date of the last payment, and the date the account went into default. These dates are critical because they determine how long a debt can remain on your credit report. Under the Fair Credit Reporting Act (FCRA), most negative information, including collection accounts, can only stay on your credit report for seven years from the date of the first delinquency that led to the account being sent to collections.

Can a Collection Agency Report an Old Debt as New?

The short answer is no—a collection agency cannot legally report an old debt as new to reset the clock on your credit report. The FCRA is clear: the seven-year reporting period begins from the date of the first delinquency with the original creditor, not the date the debt was sold to a collection agency or when the agency began reporting it. This date is often referred to as the “date of first delinquency” (DOFD).

However, some collection agencies may engage in practices that make it appear as though an old debt is new. This practice, known as “re-aging,” is illegal under the FCRA. Re-aging occurs when a collection agency falsely updates the DOFD or the date of last activity to a more recent date, making the debt seem newer than it is. By doing so, the agency can extend the time the debt appears on your credit report, potentially harming your credit score for longer than legally allowed.

How Re-Aging Happens

Re-aging can occur in several ways, including:

Falsely Reporting a New Delinquency Date: A collection agency might report a more recent date as the DOFD, even though the original delinquency occurred years earlier.

Reactivating the Debt: If you make a partial payment or acknowledge the debt in writing, some agencies may claim this resets the clock. However, this typically affects the statute of limitations for collecting the debt (the time a creditor can sue you), not the credit reporting period.

Transferring the Debt to Another Agency: When a debt is sold to a new collection agency, the new agency might report it with a recent date, creating the appearance of a new debt.

While these tactics may seem deceptive, they are not always intentional. Errors in record-keeping or misunderstandings about the debt’s history can also lead to incorrect reporting. Regardless of the cause, re-aging is a violation of federal law, and you have the right to dispute it.

The Statute of Limitations vs. Credit Reporting Period

It’s important to distinguish between the statute of limitations for debt collection and the credit reporting period. The statute of limitations is the time during which a creditor or collection agency can legally sue you for an unpaid debt. This period varies by state, typically ranging from three to six years. Making a payment or acknowledging the debt can restart the statute of limitations in some states, but it does not affect the seven-year credit reporting period.

For example, if you have a debt from 2018 that’s past the statute of limitations in your state, a collection agency cannot sue you for it (assuming no payments or acknowledgments have reset the clock). However, the debt can still appear on your credit report until 2025, seven years from the DOFD.

What to Do If a Collection Agency Re-Ages a Debt

If you suspect a collection agency has reported an old debt as new, take these steps to protect your credit:

Review Your Credit Reports: Obtain free copies of your credit reports from Equifax, Experian, and TransUnion at AnnualCreditReport.com. Check the DOFD and the date the collection account was reported. If the dates seem incorrect, note the discrepancies.

Dispute the Error: File a dispute with the credit bureau(s) reporting the inaccurate information. Include documentation, such as old account statements or correspondence with the original creditor, to prove the correct DOFD. The credit bureau must investigate within 30 days under the FCRA.

Contact the Collection Agency: Send a written request to the collection agency for validation of the debt. Under the Fair Debt Collection Practices Act (FDCPA), they must provide proof of the debt’s validity, including the original creditor and the DOFD.

File a Complaint: If the issue persists, file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general. These agencies can investigate violations of the FCRA and FDCPA.

Consult an Attorney: If the reporting has significantly damaged your credit, consider consulting a consumer protection attorney. You may be entitled to damages for violations of federal law.

Protecting Yourself from Debt Collection Tactics

To avoid falling victim to questionable debt collection practices, follow these tips:

Know Your Rights: Familiarize yourself with the FCRA and FDCPA. These laws protect you from unfair practices and give you tools to dispute errors.

Keep Records: Maintain records of all communications with creditors and collection agencies, including letters, emails, and payment receipts.

Avoid Acknowledging Old Debts: Be cautious about making payments or acknowledging debts that are past the statute of limitations, as this could restart the clock for legal action.

Monitor Your Credit: Regularly check your credit reports for inaccuracies and address them promptly.

Conclusion

A collection agency cannot legally report an old debt as new to extend its time on your credit report. The seven-year reporting period is fixed based on the date of first delinquency, and any attempt to re-age a debt is a violation of the FCRA. By staying informed about your rights, monitoring your credit, and taking swift action to dispute errors, you can protect your financial health and ensure your credit report accurately reflects your history.

Don't hesitate to take action if you’re dealing with a recent debt or other collection issues. Review your credit reports, dispute inaccuracies, and seek help from consumer protection agencies. With the right knowledge and tools, you can navigate the debt collection process with confidence and keep your credit on track.

Call (888) 803-7889 to get credit repair services now!