What Are the Laws on Re-Aged Debt?

Credit card debt that's legally re-aged can help consumers who are in financial trouble. However, companies that are seeking to recoup old debts from consumers may attempt to illegally re-age their accounts by collecting all or part of the amount those consumers owe. Re-aging essentially involves removing or moving back the date an account became delinquent.

Delinquent Accounts

A legally re-aged credit card account can help a cardholder who has fallen behind on payments. A creditor who re-ages an account essentially restarts the payment timetable by reporting a delinquent account as a current account. That stops late-fee charges and allows the cardholder to get a fresh start by making on-time payments. The cardholder still has to pay the money that was previously owed, but the account is no longer considered delinquent.

Federal Regulations

It's difficult to get a credit card company to agree to re-age an account. However, companies that agree to do so must follow guidelines from the U.S. Federal Financial Institutions Examination Council. For example, as of March 2011, federal regulators won't allow credit card accounts to be re-aged more than two times over five years. Regulators also require that accounts be at least nine months old before credit card companies agree to re-age them to help customers whose accounts are delinquent.

Illegal Re-aging

State regulations place limits on the number of years that creditors and lenders have to sue consumers to collect delinquent debts. However, some debt-collection companies try to skirt the law by re-aging delinquency dates to extend the amount of time they have to sue consumers to collect old debts.

Credit Ratings

Debts re-aged illegally can hamper your credit rating. Most bad debts can only be listed in consumer credit reports for seven years under regulations in the U.S. Fair Credit Reporting Act. A debt-collection company that tampers with the date that an account became delinquent can make the account look newer than it is. In such cases, a bad debt can appear on a credit report longer than seven years. Consumers who discover that old accounts on their credit reports have been re-aged can contact the credit bureaus that issued the reports to dispute the re-aged debt.