Can a Collection Agency Report an Old Debt as New?

First, let’s talk about what we mean by “old debt.” Once you’ve missed payments for about 180 days, your debt becomes “seriously delinquent.” This is usually when things start getting interesting (and not in a good way). Your original creditor might decide they’re tired of trying to collect and sell your debt to a collection agency for a fraction of what you owe. Think of it as your debt going through a costume change. It’s essentially the same debt, but with a new outfit and different collectors knocking at your door.

These debt sales are incredibly common. In fact, the debt-buying industry is a multi-billion-dollar business, with collection agencies snatching up portfolios of old debts with great urgency these days. They pay pennies on the dollar, which is why they’re so motivated to collect the full amount from you.

Now, here’s where things get dicey. Your debt can negatively affect your credit score. Worse still, debt on your credit report can be there for seven years. However, some collection agencies try to reset this clock by reporting old debts as new ones. It’s like they’re trying to make your debt go back in time. And that’s where we need to talk about whether this is legal or not.

So today, I’m going to talk about whether or not a collection agency can report an old debt as new, and what you can do about your old debts. 

But before we dive in, you may also want to check out our other post: “Can a Collection Agency Charge Interest on a Debt?”

Can a Collection Agency Report an Old Debt as New?

No, a collection agency cannot legally report an old debt as new. That’s a big no-no according to both the Fair Credit Reporting Act and federal regulations. Think of it like trying to reset your car’s odometer—it’s not just frowned upon; it’s actually illegal.

When your original creditor sells your debt to a collection agency, some interesting things happen behind the scenes. While the collection agency now has the right to collect the debt, they don’t get a magical time machine to make it newer than it is. The debt’s age—and its timeline on your credit card or report—must stay tied to when you first missed payments with the original creditor.

Here’s what actually happens when your debt gets sold to a collection agency. The original creditor marks your account as “charged off” or “transferred,” and the collection agency can then report the debt under their name. But they have to maintain the original delinquency date.

So, if you spot a collection agency trying to make your old debt look fresh and new on your credit report, that’s a red flag. This practice, sometimes called “re-aging,” violates your rights under the credit reporting act and can seriously mess with your credit score. Fortunately, you can dispute these incorrect reports with the credit bureaus and file complaints with the Consumer Financial Protection Bureau.

How Long Can A Debt Collector Legally Pursue Old Debt?

Depending on your state, the statute of limitations typically ranges from 1 to 6 years for most debts, though some states stretch it out to 10 years. After this time passes, these become what’s known as time-barred debts. This means the collector can’t successfully sue you for payment. But there’s a catch!

The debt doesn’t magically disappear just because it’s past the statute of limitations. Rather, once the statute of limitations runs out, they can still chase you to pay the debt. However, they can’t legally tag you (sue you). However—and this is important—if you make even a small payment or acknowledge the debt in writing, you might accidentally reset the clock. It limits or resets the Fair Debt Collection Practices Act protection you may have been enjoying previously.

But then, it gets even trickier. Collection agencies might still try to collect on debts past the statute of limitations, even though they can’t sue you. This is legal (though questionable), as long as they follow the Fair Debt Collection Practices Act rules about harassment and don’t threaten legal action they can’t take.

However, remember that just because a debt is time-barred doesn’t mean it won’t negatively affect your credit. These debts can still show up on your credit report for that seven-year period, influencing your credit score and ability to get new credit, regardless of whether the statute of limitations has expired.

How To Get Old Debt Off Your Credit Report

According to the Credit Reporting Act and other legal editorial standards, here is the step-by-step guide to cleaning up your credit report:

Step 1: Get your free credit reports.

First things first, you need to know exactly what you’re dealing with. Pull your credit reports from all three major credit bureaus. You’re entitled to one free report annually from each bureau, though many services now offer regular free access. Look for any debts that seem suspicious, incorrectly reported, or that should have aged off your report by now.

Step 2: Review each debt’s timeline.

Check when each debt first became delinquent and do some quick math. Remember, most negative items should show up on your credit report for seven years from the original delinquency date. If you spot anything older than that, it’s time to dispute it. Pay special attention to any old debts that mysteriously appear with recent dates—that’s a red flag that a collection agency might be trying to reset the clock.

Step 3: Gather your documentation.

Before you start disputing anything, arm yourself with proof. This includes:

• Original account statements
• Records of any payments you’ve made
• Correspondence with the original creditor
• Any bankruptcy discharge papers (if applicable)
• Documentation showing the debt is time-barred
• Records of any communication with collection agencies

Step 4: File disputes with credit bureaus.

Now it’s time to take action! For each incorrect item, file a dispute with the credit bureaus. Be specific about what’s wrong—whether it’s the date, amount, or the debt’s very existence. The credit bureaus then have 30 days to investigate (occasionally 45 if they need more information). You can file disputes online, but sending them via certified mail with a return receipt gives you better documentation.

Step 5: Contact the collection agency.

While the credit bureaus are doing their thing, write to the collection agency. If they’re reporting old debt as new or keeping it alive past its expiration date, demand they correct it. Use certified mail and explicitly state any violations of the Fair Credit Reporting Act or Fair Debt Collection Practices Act you’ve identified. Give them 30 days to respond and correct any errors.

Step 6: Escalate if necessary.

If the credit bureaus or collection agencies aren’t playing ball, it’s time to bring in the big guns. This means filing complaints with either the Consumer Financial Protection Bureau, the Federal Trade Commission, and/or your state’s attorney general’s office. These organizations take violations of consumer protection laws seriously, and sometimes just mentioning them in your correspondence can light a fire under stubborn creditors.

Step 7: Follow up and monitor.

The job’s not done until you’ve confirmed the changes on your credit report. Check back after 30-45 days to ensure the disputed items have been removed or corrected. If not, rinse and repeat—send another round of disputes with any new evidence you’ve gathered, and keep monitoring your credit report regularly to ensure old debts don’t try to rise from the dead.

While debt collectors have their rights, so do you!

However, understanding these rights is your best defense against unfair practices. Keep in mind that while collection agencies might be persistent, they must play by the rules. Your credit score is too important to let questionable reporting practices or outdated debts drag it down. Stay vigilant, know your rights, and don’t hesitate to speak up when something doesn’t seem right. 

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