Sunday, January 22, 2012

Collection Agency Re-aged Derogatory Information On Credit Report

If you're one of the many Americans who are lying low and waiting for old collections to fall off your credit report, you may be in for a nasty shock. Some unethical collection agencies tamper with the dates they report to the credit bureaus. By changing the dates associated with the account, the collection agency can ensure that a derogatory entry remains on your credit report for longer than the law allows. This process is known as "re-aging" and it is illegal.

How Debt Collectors Re-age Debts

You may end up waiting longer than 7 years...
Let's say your original debt was a defaulted credit card debt and you stopped making payments in January of 2005. In June of 2005 – 180 days later – the credit card company assigns your defaulted account to a collection agency and updates your credit report to reflect that the debt you owe was charged off. When the collection agency gets the debt, it adds a new derogatory trade line to your credit report. Now you have both the original creditor's derogatory entry and one from a collection agency.

The Fair Credit Reporting Act dictates that most debts can only remain on your credit report for 7 years and 180 days from the date of first delinquency. The date of first delinquency is the date that your payments to the original creditor were first classified as late.

What many debtors don't realize is that the DOFD applies to all entries for a given debt. Because few creditors send accounts to collection agencies until they are 180 days' delinquent, collection agency entries rarely remain on debtors' credit records for the full 7.5-year period. The absolute latest a collection account should disappear is at the same time as the original creditor's charge-off. In other words, it simply isn't legal for a collection agency to leave derogatory information on your credit report for longer than the original creditor.



SOL and the Credit Reporting Period

Don't confuse the statute of limitations for lawsuits with the credit reporting period's statute of limitations. These are two totally different time frames. The statute of limitations for lawsuits refers to the amount of time a debt collector can legally sue you in your state. Each state has different statutes of limitations. The credit reporting period – 7.5 years – is federally mandated and the same in every state. Generally the statute of limitations for lawsuits expires long before the credit reporting period.

This is covered in more detail here: The Credit Reporting Period vs. the Statute of Limitations

Re-aged Collection Accounts

If you pull your credit report and the original creditor's derogatory information is gone but a collection agency's negative trade line lingers on your report, there's a good change the collector re-aged your debt.

Re-aging sets back the clock on your debt.


When a debt collector re-ages accounts, it reports a date of first delinquency that is much later than the actual DOFD. In the above example, our DOFD was January of 2005. The collection agency gets the account in June of 2005. If the collection agency reports the date of first delinquency as the date it received the account – in June – the derogatory information will remain on your credit report until June of 2012, rather than being removed in January of 2012, as federal law dictates it should be.

Although clearly illegal, this nasty little trick is incredibly common. I see it literally All. The. Time. A collection agency that regularly alters the dates on its accounts could theoretically ensure that a collection account remains on your credit report indefinitely.

What To Do About Re-aged Collection Debts

Removing a re-aged collection account from your credit report is much easier if you have proof to back up your claim of re-aging. This is one reason I recommend that all individuals print out their credit reports from each credit bureau once each year. The dates reflected in the original creditor's trade line prove your claim of re-aging – but that's much harder to do once the original creditor's trade line ages off your account. Most credit card companies don't keep charge-off records longer than 18 months, so getting proof from the original creditor after the fact is difficult, if not impossible.

If you have proof, send it to the credit bureau along with a letter explaining that the collection account is obsolete and should have been deleted, as the 7.5 year period for that particular debt has already passed. Make sure to use the word "obsolete" in your dispute. Disputes are coded and while I won't get into that right now, I will say that you want your dispute to have the "Obsolete" code.

You can also take your re-aging issue up with the collection agency itself. A well-written "I have every right to sue you" letter along with proof of the re-aging is often enough to coerce debt collectors to remove derogatory information from your credit report. Make sure you point out that you want the trade line deleted. Anything less is against federal law.

81 comments:

  1. I have some accounts in collections. I'm working on paying the ones that aren't about to age out of the 7.5 years (according to my Experian credit report--the free annual one). My question is this: does a negative item that has fallen off your credit REPORT continue to affect your credit SCORE? I recently got engaged and I'm trying to get my credit in order before we get married both to make sure that if we need to open a joint credit account to pay for wedding expenses, and to be ready to buy a house soonish after we get married. I need to know that if these things that are scheduled to fall off my report within the next year or two will continue affecting my score so I can decide how to deal with them. According to one of your earlier posts, the statute of limitations in my state has expired on most of them.

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  2. Amber,

    Once something ages off your report, its gone for good and will no longer affect your score. So sit back, wait patiently, and enjoy your new higher credit rating – and your new marriage. :)

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  3. Hi, Lee-
    This is showing up on my credit report:
    Creditor Name: (collection agency)
    Account No.: ****
    Original Creditor: (medical provider)
    Responsibility: Individual
    Condition: Derogatory
    Original Balance: $123
    Balance: $123
    Date Opened: 06/25/2007
    Date Reported: 02/02/2012

    The $123 was paid to the original creditor a couple of years ago. Is there anything I can do to get this cleaned up?

    ReplyDelete
    Replies
    1. Send a letter to the credit bureau and notify them this balance has been paid. you may also want to see if you have any receipt of proof of payment. if you used your bank account call them to go back to the specified date and have them fax or email to you copy of that payment in case you need to present proof.

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    2. I know one thing for sure if a medical provider is reporting you to the credit bureaus. that is illegal look under the hippa act that all medical including bills or confidential and they will have to remove it or u can can sue

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  4. Lee,
    My husband and I have been working for the past year on cleaning up our credit so that we can buy a home. I noticed that 2 accounts appear on my credit report under collection agencies LVNV Funding and Calvary Portfolio Services, in both cases the original creditors (Sprint PCS and Sears Card) fell off some time ago. I believe both to be cases of the agencies re-aging the accounts. How can I go about obtaining proof? Also if I contact the original debtors (Sprint and Sears) for Proof of first delinquincy will that re-start my debt with them and show up on my credit report again. Also the largest one is Calvary Portfolio for 1,700 (original creditor Sprint) is due to stop reporting in November. Should I just wait it out on this one even if the account has been re-aged?

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  5. This is reminding me to pay my credit,I hate to say that i am dis agree about it but it has a good and bad things,but all in all this is very informative one.

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  6. I have an account that the DOFD is 10/2008, the collection agency is reporting that the "opening date" is 11/2008. Has this collection agency re-aged this account?

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  7. Have them send you the settlement offer IN WRITING. Open a new checking account at your bank. Put only the amount of money in the account that you need to make the payment each month and pay out of that account
    Collection agencies

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  8. I have a debt that was sent to a collection agency 7 years ago. I have been paying on the debt for 6 years. The DOFD is 7/2005. Will the fact that I have been paying on this debt this whole time cause the debt to remain on my credit report or will it fall off this year?

    Thanks

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    Replies
    1. For every payment you make it restart the life cycle of statue of limitation in your state. unfortunately this will not be removed.

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    2. The statute of limitations and the reporting period are two different things. After the reporting period (7years and 180 days) expires, the debt will be removed, regardless of whether the statute of limitations has restarted or not. The statute of limitations governs lawsuits, NOT how long something remains on your credit report.

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  9. How often and how many times can a creditor report derogatory information on your credit report.
    I GAVE my ex-wife the house in the divorce, she was ordered to have the home out of my name within 90 days of the divorce. I tried to purchase a new house in December of 2011 with my current wife and found out the house had just been foreclosed and STILL had my name on the account. Since then, the mortgage company has reported a $92K foreclosure on my credit report every month almost to the day. Every month they report it, my score drops even more.

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  10. Hi Lee,

    I left a related comment/question on another post of yours (very nice site here, by the way--thank you kindly).

    Anyway, here is a situation: I have an old medical bill that went to a collection agency and is now on my credit report. The original bill/creditor never reported to the credit agencies, but it became past due nearly two years before the credit agency reported it. (Incidentally, I don't think I should be liable--insurance refused to pay because they said I had another insurance policy that should have paid. Since both insurance companies said the other was liable, I got stuck with the bill, which I refused to pay.) Today the bill is over four years old but it's only two years old (a bit less, actually) on my credit report. It's only about $300, half of that late fees of some kind, I think.

    Is this an example of illegal re-aging? If so, how would you suggest I deal with it? I didn't pay on principle, but right now I'd be happy to pay if it would get this thing off my report, which is otherwise very clean. My FICO is over 700, but probably would be close to 800 were it not for this one collection.

    Thanks so much!

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  11. I have an account which was placed with a collection agency in June 2012. It's appearing on my credit report three times. Two with an open date of October 2012 and one with an open date of November 2012. Is this legal? It's the same debt.

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  12. The debt can appear on your credit report in the form of the original creditor's report and ONE collection account. Even if the collection agency sells the debt to another collector, only one of them can have their trade line on your credit report at one time. You can dispute the two additional collections that should not be there with the credit bureaus.

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  13. I am a victim of re-aging. I opened a 1st and 2nd mortgage on a home in 2002. By 2003 I had lost my job and my home to foreclosure. My last payment was made February of 2003. The 1st mortgage fell off my credit in 2010. The 2nd has been re-aged a number of times over the last 5 years. The first time was after the loan was transferred from BofA (BAC Home Loans) to Litton Loan Servicing. Litton changed the date to show my first delinquency in 2007. I disputed this in 2010 only to have them change the date again to May of 2010. The loan was then transferred to Ocwen. After disputing directly with Ocwen, they changed the date to November of 2010. I have disputed this so many times that even the CRA's refuse to allow me to continue to dispute it. I have even provided the CRA's and Ocwen copies of the official payment records from BofA. Ocwen will not respond to my certified letters, and the CRA's tell me that I have no BofA accounts. Because the account number was changed when Litton took over the loan, the CRA's say it is not the same account. Worse of all, no one will help. Even numerous attorneys have been contacted, but none are interested in representing me. I had one tell me that my case would not make a good class action suit! I am not looking to make millions off of these criminals, I just want this removed from my credit so I can move on with my life. It is very frustrating, and I feel I am just spinning my wheels every time I send another certified letter, knowing it will never make a difference.

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  14. Erik,
    I want to answer your question to the best of my ability, but the answer is long. I need your permission to make your question into a separate blog post.

    ReplyDelete
    Replies
    1. Lee,
      Thank you for the quick response. And yes, you have my permission to use my conundrum for another blog post. Please let me know if you need any further info from me on my specific situation.

      Delete
  15. I would like to see the answer to that so feel free to email me that link. My question is on the original creditor: if you had trouble showing the original creditor, doesn't it follow they'd have trouble also? I mean if you disputed the debt as not being yours wouldn't they have to turn around and prove the original debt? Otherwise these companies could just make up imaginary debt and try to extort a payment.

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  16. When you dispute a debt with a credit bureau, the credit bureau faxes your dispute to the CA along with a form saying something to the effect of, "Is this valid?" All the CA has to do is fax back a response saying "yes." As unethical as the process is, no real investigation is involved.

    And yes, they could make up an imaginary debt and extort payment. I have seen collection agencies validate debts that clearly did not belong to the person they claimed owed them. The credit bureaus back them up.

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  17. I have noticed that on an old debt, allmost, if not at the 7.5 yr mark still shows on my report, they keep updating the date of the debt. This collection agency even went so far as to call my father (elderly father) and tell me I owe money and that he is going to have me arrested and take me to court and that my father is going to be subpeonaed to appear in court, etc....(I thought this was illegal?) Everytime they update the debt, the clock restarts. Also, i noticed some will see the debt and then I have two marks on my report for one debt. What do I do? This guy really freaked out my father, he also called me while I was living in Ohio and threatened to call the police on me, he pretended to be an attorney, etc....Why do they allow them to do these things?? It's not right. How can I stop this? If I had the money to pay them, I would, but I am a disabled veteran who receives a pension.

    ReplyDelete
    Replies
    1. They're not allowed to do these things. It's very very illegal. You can sue the pants off them.

      As far as updating your account, the date you're seeing is probably just that: updates. It doesn't affect the date of first delinquency or the date of removal. If the debt is past the SOL, just send them a cease and desist letter. Problem solved.

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    2. Report them for violations of Fair Debt Collections Practices Act to your state atty generals office as well as Consumer Financial Protection Bureau (online form). You can also contact an attorney and it should cost you nothing and you should be able to be paid $1,000 for the violation.

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  18. Hi,

    I had a debt that is no longer on my report BUT now Midland is on there with the "open date" as 1/2012. When I spoke to them, they referred me to the account that I thought it was (Dell) but I messed up with them around 2005 so that explains why Dell isnt on there anymore. I sent the a DV letter and they responded saying that my DOFD was 7/07 but im lost. I am not sure what to believe or what to do at this point. I believe this is re-aged and zombie but I have not a clue. Pls help... thanks!

    ReplyDelete
    Replies
    1. The article above explains your options when it comes to re-aged debt. If that doesn't work, you can hire an attorney and threaten Midland with a lawsuit. As a rule, CAs don't want to continue breaking the law when a consumer becomes too much of a threat. You will, of course, need proof that the Dell debt was charged off, such as an old demand letter from Dell, and that Midland is collecting on that same Dell account. Midland has to provide you with the name of the OC if you request it. It will take time and effort, but you CAN successfully fight a re-aging. Sometimes just threatening to sue is enough to get things straightened out.

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  19. ok. So once upon a time I had a debt with Dell (It had to be in 2004 or so that I bought this laptop). I stopped paying because I was young and silly and it came back to get me. I didn't pay as agreed for who knows why but now I need help and understanding.

    Dell is no longer on my CR but now i see:

    MIDLAND FUNDING Unknown
    800-825-8131

    More Account Details
    Account Name MIDLAND FUNDING No Data Returned
    For This Bureau No Data Returned
    For This Bureau
    Account # 854677XXXX
    Account Type Debt Purchase
    Balance
    Date Opened 1/1/2012

    There is no other info so I called Experian (as they are the ONLY CRA that has this on my file) and they somehow see things I cant such as:
    Midland being linked to citi bank
    DOFD: 7/07
    The original may have been removed for other reasons or the account was never reported to them.

    I am not sure why the Date opened says 1/12 if this debt is very old. How can I get it to disappear? do I have to wait 7 more yrs? isnt this a zombie debt? what to do?

    Also Judgements, how long does it take to go away? is it 7 yrs or 10+? I have heard many different answers.

    Thanks in advance!

    ReplyDelete
    Replies
    1. If the Midland account is the debt that Dell sold when you didn't pay, then the account has been re-aged. The Date of first delinquency (the DOFD) should be the same as the date Dell charged off the debt. Midland is the world's worst about re-aging.

      Since you're asking about judgments, however, I have to assume that Midland sued you and got a civil judgment against you. If they did this in July of 2007, that would explain why the DOFD says "7/07." The reporting period for judgments is different depending on your state. It's generally 10 years but could be shorter, depending on where you live. I can't give you a solid answer on that without knowing what state you're in.

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  20. This comment has been removed by a blog administrator.

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  21. I have a debt collector who deletes and re-instates my debt every three weeks to include interest that accumulates over that period of time(usualy a dallar). Is this practice legal?

    Thanks in Advance
    jo

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    Replies
    1. I'm missing something here. There is no advantage whatsoever for a collection agency to delete an account and reinsert it from your credit report every three weeks. I'm almost positive the reporting contract wouldn't allow it. Highly unlikely? Yes. Illegal? Not to my knowledge.

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  22. I have had 4 different collection companies come after me for a cell phone bill that was from 2007. The debt kept getting sold off for some unknown reason. Not one of them reported it to the credit bureau ( also weird). Well as of today I find out a new collection company reported me for that debt. The date states 8/24/2012. I did not receive to my knowledge any letter from this company stating the debt. I have never acknowledged owning the debt to begin with to any other collection company. What's going on here. How do I handle this.

    Thanks

    Jay

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    Replies
    1. Unfortunately, if the collection agency claims you owe it, you don't have to agree for them to have the right to report the debt to the credit bureaus. Nor do they have to notify you before they make the report. The good news here is that no matter when the debt was finally reported, it can't remain on your credit report for longer than 7.5 years. So, take the date you defaulted on the original account, add 7.5 years and there's your removal date. In this case, it looks like you'll have a collection on your credit report for about a year. Many, many people here would call you a very lucky man.

      Beyond this point, there really isn't much you can do. You can put yourself through the hellish process of trying to dispute it, but if it were me I'd just grit my teeth and wait it out. Paying it would be dangerous since the SOL has likely already expired and paying any portion of it restarts the clock. The last thing you need is a lawsuit on top of a collection.

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  23. Got a summons and being sued by midland and they are not the original creditor but there attorney listed the original creditor as " original creditor identified as credit card number” and listed a (supposed credit card number I guess). Can they do this? What should I do?

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    Replies
    1. Wow. Just wow. If their attorney doesn't even know the name of the original creditor, that's an excellent sign.

      In all honesty, I have no idea whether or not they can do that. I suppose you could contest it but it would end up just sounding petty. Now, you CAN demand that they give you the name of the original creditor and the FDCPA forces them to comply.

      What should you do? Answer the summons within the time frame provided. If you don't answer the summons, provide a defense and force them to prove their claim in court, you're going to end up with a default judgment, which has some very severe consequences. Remember, the burden of proof is on THEM and if their attorney doesn't even know the name of the original creditor...well, you get the picture. They may even drop the suit when you answer it, since 90% of these go unanswered and end up in default judgments and collectors really hate to have to actually PROVE their case in court.

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  24. Hello...I am seeking some advise on how to handle a charged-off credit card account. The problem I have is that in June 2007, I defaulted and a charged off has been marked on my credit report. The account was not sold (as far as I know) and I was never contacted by a collection agency. In 2009, the bank’s debt recovery division contacted me and we agreed on a monthly payment, which I submitted until the end of 2010. In mid 2011, the bank that originally opened my account merged with another bank, with which I now have an account. Recently, I visited the new bank to inquire about the charged off accounts since I was preparing to purchase a home. To my surprise, I was told that the account does not exist on their records; however, they continue to report it to the different CRAs.

    My first question is, has my debt re-aged because I made several payments until 2010?

    Also, is it wise to request the bank to remove the negative remark on my credit report based on the fact that they do not have a record of that account? I would like to avoid having this account sent to collections and would prefer dealing with the bank.

    Thank you.

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  25. As far as your first question goes – no, the reporting period for your debt has not changed. The reporting period is set in stone, regardless of when or if you make payments. The statute of limitations for lawsuits, however, does reset each time you submit a payment.

    If the bank has no record of your debt, then they have no business reporting it on your credit report. By all means, fight to get it removed.

    ReplyDelete
    Replies
    1. Thank you for your feedback.

      Finally, I got an answer regarding my SOL being reset due to my payments.

      The issue I have about the report is that I did try to have the account deleted by the CRAs', but they came back updated. I was told it was automated and that it may well be unverified by the bank. Is this true? Now that I stand the risk of a lawsuit, I feel it safer to do nothing.

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    2. Yes, its automated. When you send a dispute to the credit bureaus, they use a program called eOscar to forward your dispute to the collector. eOscar then matches the information in the request to the information in the collection agency's files, verifies the debt and sends the verification to the credit bureaus.

      Of course, as you can see, this is an example of the collector simply verifying that their earlier report contained the information they had on file for you. Basically, when a creditor receives a dispute it looks through its records and says, "Yep, this is what we reported." not "Yep, this information is actually true."

      You can, however, make an appointment to speak with a loan officer, the bank president, or anyone else at the bank other than a teller, explain your situation, and ask that the bank remove the negative entry.

      If it were me, I'd go directly to the bank and find out just what they had on me. For example, during my meeting I would say, "I have no recollection whatsoever of this debt. I pay my debts. I was hoping you could look into this for me and find out what's going on. This negative entry is hurting my credit scores, and I desperately need it to get cleared up. Saying something along the lines of, "You don't have records of this so you should remove it." is unlikely to work. It's akin to saying, "I did it, but you can't prove it!"

      I would also tell the bank president, loan officer, or whomever that I had disputed this with the credit bureaus and it came back verified. I'd pointedly ask how something could be verified if no records about it existed (of course, we know the answer to that, but we don't want them to know that we know, now do we? :)).

      If you really want to get ballsy, have this conversation with the bank president and ask your attorney to tag along. Nothing, and I do mean nothing, makes people in power positions as willing to help you as an attorney.

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    3. Thank you for the advise, Lee. I appreciate you giving me tips on what to say. In all honesty, I was going to express exactly what you said I should not say. I am definitely going to inquire about the account now. Eventually, I will have to deal with it anyway.

      Thanks again.

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  26. Hey all, just a follow up message, lol. Firstly, I'm no longer engaged (not married either, but good riddance on THAT garbage...). Anyway, just because my REASONS for wanting to clean up my credit have changed, I didn't stop my vigilance. Because of that, I got a re-aged account deleted from my (Experian) report. I had an outstanding bill from Sprint, from when I switched over to a new carrier due to customer service issues. I didn't violate my contract, I waited until it was up, but I just left; I had been on a family plan with my sister, and she said she would pay the last bill, but it was in my name. She didn't pay it, and I'd moved a couple times, so Sprint couldn't find me for a few years. I literally just got a "settlement offer" from some collections agency last week, and that reminded me "hey, it's been a year since I got my free annual report" so I ordered just the one (I like to spread them out over the course of the year, something I read online or in a book). Basically, I was like, it's been like three years since I'd heard about this debt, so I remembered from this site that communication with them could re-age the statute of limitations for suing, so that's why I got my report, to see when it was scheduled to fall off my report. When I saw the dates on my report, it looked off, so I called my current phone carrier and got the date that I started a plan with them. Using that information, I disputed the entry because it was over 2 years behind when I knew I'd last paid anything to Sprint. I just got the email from Experian, and they totally deleted the entry. I thought they'd just update it with the correct information, which WAS one of the potential outcomes of the dispute, but they deleted it totally. I'm not gonna argue with that, lol.

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    Replies
    1. Congratulations! I love it when people post success stories. And don't worry, communicating with a debtor may cause them to update the date of last activity on your credit report, but it doesn't restart the statute of limitations for a lawsuit. I see that bit of info being passed around quite a bit, but its simply not true.

      Once again, thanks for sharing your success. The folks here need to hear that a good outcome is possible. It's awfully easy to get disillusioned when dealing with collection agencies.

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  27. I have an account on all 3 cb. All 3 were set to be removed March 2014. I didn't remember this account so I disputed them. They all came back as verified but experian changed the removal date as November 2019. I have called them multiply times sent in the original credit report showing the original removal date but the won't help. They say there's nothing they can do because that's the information they are getting from the creditor. What can I do? Is it legal for experian not to help me even when I have the original report showing the dates were changed. This is the one thing stopping us from buying a house. Thank you

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    Replies
    1. Any suggestions ? This is the one thing keeping us from buying it first home. Thank you

      Delete
  28. Hello Lee, I was wondering if you could give me some advice on something.

    In 2006 I opened a store credit card and it was charged off in 2008. Anyway, I've had some issues with this debt being passed around to different collection agencies, but ultimately on my credit reports and other documents it was showing that it was charged off in 2008. Well, in September 2012 I was alerted that my credit score had suddenly dropped 109 points and I couldn't figure out why. I finally noticed that a collections agency had flagged my account for collections for the amount of that credit card. My question is can they do this since my credit report already shows that debt as a charge off in the original form of that store credit card? Has this debt been re-aged? It was such a huge blow because my credit score was finally good and now it's high risk again. My credit report now reads that the date the card was opened was 2006, the balance is $0 and that it was charged off and closed in 2008. It also says it was updated July 2012 and that the last payment was made in September 2011 but that's impossible because I never made a payment on it past the charge off date. After that I have Calvarlry Portfolio SVCs reported on and it states the debt of that credit card and the date the account was updated as September 2012 (i.e. when my credit score dropped). It's also interesting to note that the "last payment made" is the same date as the last payment made for the charged off account, September 2011. I want to go about fighting this, but I'm not sure where to start. Any advise is greatly appreciated, thank you!

    ReplyDelete
    Replies
    1. Your account hasn't been re-aged. Your credit report can show both a charge-off and the collection agency that purchased the charged off debt. It cannot, however, show two different collection agencies collecting for the same debt.

      The last payment you're seeing is most likely the payment that the collection agency made to the creditor in September 2011 when it purchased your debt. Note that I say "most likely." I haven't seen the actual credit report so I can't be 100% certain.

      If it were me, I'd print out my credit reports and put them in a safe place along with my bank statements for the month in which the supposed "payment" was made and any other documentation I had that illustrated when the debt was originally charged off, not sold. This will help you demonstrate the true age of the debt in the event the collection agency tries to re-age your debt or tries to sue you beyond the SOL.

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  29. I have a very old sears account, it is 6 years since first reported as delinquent. I have the money to pay it right now, Should i wait til it falls off to pay or pay now...I dont want it to restart the 7 years, if it even does that? I gave the card to my ex after divorce for the kids, she did great for years then last month I pulled a report for a home purchase and found this..My fault totally, I want to take care of it but dont want the cycle to restart.

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  30. The reporting period is 7 years and 180 days. Paying a debt does not affect reporting period on your credit report. It does, however, restart the statute of limitations for a lawsuit. If you plan to pay in full, this doesn't matter. Just make sure you get a zero balance statement from the collection agency proving that you paid.

    If the statute of limitations in your state has already expired, you can sit back and just wait for the debt to fall off your credit report. Paying it doesn't improve your credit scores at all – making paying a debt after the SoL expires pretty much pointless.

    Keep in mind that just because the debt is 6 years old that doesn't mean the SoL is no longer in effect. The SoL refreshes each time you missed a payment. Thus, the SoL can theoretically continue on long after the debt no longer appears on your credit report.

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  31. I have a question and am hoping you can help me. I recently received a letter from a debt collection agency working on behalf of my condo association. The letter showed that I owed 2 months rent (the past two months, march and April) and that my account was delinquent as of April 16th for a total of $900. I know this to be incorrect as I have receipt for march payment on April 1st, and just paid the April bill yesterday. When I paid yesterday, it is true my account was exactly 7 days overdue. But as of today, I have paid all of the supposed debt. Is my association breaking any laws by not contacting me about my bill and by turning me over to a collections agency after only 7 days of delinquency? And is there any way to avoid paying the collector fee of $155 since I have already paid the debt?

    ReplyDelete
    Replies
    1. You don't owe the collection agency a dime. It's time to make a visit to your condo association headquarters armed with your payment receipts, the canceled checks (if you have them. If not, you can always print out your online banking record to prove your payments were cashed),the collection letters, and some grade-A professionalism. You want to make an appt to talk to someone in charge. Demand to know why you're being sent to a collection agency for two bills you've already paid and they've already accepted payment for. And check your credit report too. If they've hit your credit report with a negative trade line, a lawsuit may be in order. Let me know how it goes with your visit to the condo association and we'll go from there.

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  32. I have a large eviction debt from a nasty collections agency, from 4 years ago in WA state. I've never made any payments, plan or contact with the agency. For the past few months though, they have been trying a new tactic, updating my debt amount with interest accrued. When they do this, I get notifications from my credit alert accounts that I've now become delinquent on one of my accounts. How badly is this going to damage my credit (which is already low) and can I get them to stop without attracting attention again? I have no way at this time to begin to make payments on the debt. The original date of debt is the same, so I don't think this is re-aging, but can you help me understand the timeframe for it to fall off my account, or how long they can sue me for it?

    ReplyDelete
    Replies
    1. To the best of my knowledge, the SOL in Washington State is 6 years. The reason the collection agency is doing this is because every time it updates your credit file, it keeps its collection as a recent entry. Recent entries have a much greater impact on your overall credit score than older entries. Basically, they're just doing it out of spite to trash your credit.

      Now, if the eviction was a court-ordered eviction that included a judgment, the SOL doesn't matter because they've already sued you. In that case, they've got 10 years to collect. The collection account will disappear 7 years and 180 days after your last payment to the original creditor. In this case, your landlord. If a judgment appears on your credit report, that will show up for 10 years since the enforcement period in WA is 10 years.

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    2. Ah. I looked into the court case, thanks to your advice. Looks like the eviction case was dropped by the plaintiff after I moved out. So I believe that the original SOL is still applicable. I wish there were a way for them to stop updating my credit file. I'm a student and have no way of paying the full amount at this time. Thank you for your help!

      Delete
  33. This comment has been removed by the author.

    ReplyDelete
    Replies
    1. Lee,
      Are you still available for questions?

      thank you.
      DH

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    2. Yes, although I have a hectic work schedule and it sometimes takes me longer than I'd like to get back to people.

      Delete
  34. Hi Lee,

    Question about a Midland collection account for an old cell phone bill. I have pasted how it appears on one of my credit reports below if necessary for reference. (I was actually going to call the credit bureau- but wanted some other advice before going that route.) There are different dates for DOFD, Date Major Delinquency First Reported, and Date Opened. The discrepancy of the DOFD (which is accurate) and the date opened- is this an example of re-aging? If so, would inquiring with the credit bureau trigger the Collection Company to update my account somehow? The DOFD has not surpassed 7.5 years, so I understand this isn't something that should be off my report just yet- I do want to keep an eye on it, however. Also, the SOL in my state (RI) is 10 years so even after it does fall off my report, I will technically still be eligible to be sued by Midland. I just don't know if this is being reported accurately or not, since the DOFD is clearly stated (and what I know to be accurate)- but the other dates are a little confusing.

    Thanks!


    Date Opened: 05/25/2012
    Balance: $414
    Date Reported: 05/21/2013
    Date of Last Activity: N/A
    Date Major Delinquency First Reported: 07/2012
    Months Reviewed: 10
    Factoring Company Account (debt buyer)
    Date of First Delinquency: 03/2008
    Comments: Collection account

    ReplyDelete
    Replies
    1. The "date opened" only refers to the date when the account was opened with the collection agency, not the original creditor. So no, its not re-aging. It would become re-aging if the CA changed the DOFD of the original creditor.

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  35. I have an outstanding medical bill from emergency surgery in 12/2011. The bill was sent to a collection agency. When they contacted me, I told them I did not have the money to pay them at the moment. This agency ran a hard inquiry on my report without my authorization, and I just got a new alert and it was the same agency reporting my debt as derogatory (again) last month. Is this legal? Does it affect my score?

    ReplyDelete
  36. A hard pull will drop your score anywhere from 5 to 10 points. Unfortunately, a collection agency doesn't need your permission to conduct a hard pull. They have a legitimate business relationship with you. The collection account itself will also hurt your credit score. By how much I can't say. It depends on your current scores. The higher your scores are, the more damage the collection will do.

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  37. So I am in the process of building a house. I had appox. score of 650. I had been pre-approved and started the building process. A few weeks before closing two old CA updated the activity dropping my score appox. 60-70 points. The Sol have passed and the debt was about to fall off next year. My problem is don't qualify for my home now and about to lose it because of there re-aging practices.The last report date previously showed sometime in late 2007 And that it had been purchased sometime in 2009. They have updated to all 3 CB two months in a row. I want to threaten to sue, but I cannot find anywhere in the FCRA where it states that its illegal to report on a monthly basis keeping my debt appearing as current and having the greatest effect on my fico. Any recommendations and do you also know where it states that it's illegal for them to do this.

    ReplyDelete
    Replies
    1. Unfortunately, this is pretty common. Collection agencies watch your credit report and as soon as mortgage inquiries pop up, they toss their debts on there with the knowledge that you'll have to pay them off to get approved for your mortgage. The SOL is only the period of time they have to sue. The reporting period, however, is valid for seven years from the date of first delinquency. That means they can report at any time until the debt is scheduled to fall off your report. Regardless of when it shows up as transferred or updated, it very likely hasn't been re-aged unless they continue to report the debt beyond 7 years and 180 days from the date you made the last payment to the original creditor.

      The FCRA doesn't say that its illegal because, unfortunately, it isn't. This is purely a strategic move and many collection agencies use it. Your best bet at this point is to talk to your lender and see if they will proceed with your home loan if you pay off the collections that have recently popped up. Explain that these are not recent debts that you ran up after being approved (that part is important), but an opportunistic attack by the collector. Worst case scenario, you may have to wait a few months to a year before building your home. If the date of first delinquency was in 2007, as it seems to be, you shouldn't have long to wait.

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  38. A collection agency reported for the first time in five years on 08/2013 that I had a paid collection with them. They are claiming it was assigned to them 03/2008 for a medical lab bill for $75.00. They are reporting the status as of 08/2013 - Paid; Date of 1st Delinquency 10/2007; Balance as of 08/2013 - $0 ; Last Payment Date 05/2008. I contacted the credit reporting agency and disputed this claim. The credit reporting agency came back and said that they have check with the collection agency and the debt is valid. What recourse to I have to fight this. I have no other blemishes on my credit. Is this legal?

    Thanks!

    ReplyDelete
    Replies
    1. The answer to your question was a bit more in-depth so I turned it into a post. Copy and paste the address below into your browser to reach it.

      http://collectionagencydebt.blogspot.com/2013/08/ask-lee-paid-collection-added-to-credit.html

      Delete
  39. HELLO LEE I'm in need of some serious advice .. About 10 years ago I took a gym membership out and thought I closed the account out well here I am trying to go into the reserves and when I pull my credit report it there .. I called the credit agency first and they couldn't find the debt because it was in my maiden name.. Then I took it to experian to dispute it.. Well a few days later I get A email stating that the my dispute results were in and I could ck it.. I didn't see any results so I Called the customer service agent told me that the results were that they weren't going to be moved.. So then I called and made a payment arrangemnt with the collection agency.. Yesterday I pull my report and the collection is off of my report .. And no longer under investigation .. I called the collection agency back and they aren't aware of this .. ( no I did not disclose it being deleted to them ) because the lady said it would not be removed until I paid it off.. My question is M I still covered under the Sol and can they file a judgement against me.. For regaling the debt.. I have not made any payments yet.. But I wanna know what to do before I do..

    ReplyDelete
    Replies
    1. The lady at the collection agency is wrong (big shock there, eh?). For starters, if this debt went delinquent over 10 years ago its illegal for it to be on your credit report in the first place. The federal reporting period for bad debt is seven years and 180 days from the date you stopped making payments. It was deleted because the credit bureaus clearly saw that the entry was obsolete. And guess what? Since the reporting period is expired, the collection agency can't re-add it to your report without breaking federal law.

      You don't mention which state you're in, but there are only a handful of states in which the SOL is ten years. Odds are you're in the clear since you didn't make a payment. I understand the moral need to make good on bad debts but watch out! The second you pay them a dime they have the right to turn around and sue you, no matter what they may say. For right now, you're probably safe. If it were me, I'd send the collection agency a full cease and desist letter and then forget this debt ever existed. That may not sound morally righteous, but sometimes its a matter of taking the safest course of action.

      Delete
  40. Ok so your saying I'm in the clear because the payment hasn't actually been made.. And the original debt is in the state of fl I live in Nc Now..

    ReplyDelete
    Replies
    1. Yes, to the best of my knowledge. Neither FL nor NC impose a 10-year SOL on bad debt.

      Delete
  41. hello lee,
    I have a installment with credit union (secured Loan)opened 2005 delinquent mid 2006 balance $7798 there was 0 activity it shows as closed by grantor. now the problem is in June 2013 it started reporting again as delinquent? what can I do should I dispute make go away it has been 7 years? please help

    ReplyDelete
  42. My husband who was single when the debt occurred 2009, had a Bank of America CC that went into default and then sold in Nov 2009. He had several debt collection agencies try to collect on the same debt, he never responded or contacted them. Then in late 2010 I had someone at the door hand me a paper (summons) which I had no idea what it was for or who (the kid marked on the paper that it was given to Joe but it was really given to me). I just took it and asked the kid who it was for and he just walked away. Looking at it, it was for my husband and pretty much looked fake. So I told my husband and we decided to contact them. I called and they (Asset Acceptance Corp) didn't even have the same information as the paper I was given and when I challenged them they got me a manager who then told me they were closing and hung up on me. For a few weeks following they would call me and hang up whenever I would answer, then I sent a letter to them only to contact us by mail and haven't heard from them since. I went down to the courthouse and looked the info up and learned it was real and to respond was almost $500.00, thus we never did anything. My husband called them about a month ago to try to settle and they keep adding interest and higher settlement offers which are more than the original debt (Orginal debt $5209.00 AAC wants a minimum of $6k) they keep adding interest now up to $6271.00. We are desperately trying to buy a house and this is the only thing in our way!! I'M DESPERATE! They have reported the debt on our credit report about 5 times in different names and amounts (2 of them are the original creditor BofA). Today I got an alert from CreditKarma.com that 1 of Asset Acceptance Corp was removed off of our report but couldn't find anything else.
    My questions are:
    What are my options? I just want to be done with them!
    There are multiple Companies reporting on our Credit report under different names but for the same debt. How do I handle that?
    We live in CA, do they have a statute of limitations?
    Is contacting them starting over the time limit? or just any payments?
    We just want to buy a house and be done with them but $6k is a lot of money. But I'm willing to do whatever it takes as long as I know they will do their part and remove it. My fear is I pay them and they still come after us? Some people tell us to pay it and some people tell us to wait til it falls off but it's just getting worse for us!

    ReplyDelete
  43. Hi Lee. I have a situation in which I had gone to a community college in 2003. I did not finish the semester so I'm assuming financial would not cover that. So I think I would have to pay out of pocket. About two weeks ago i received a notice from a collection agency that i owe this debt to the school and I have 30 days to dispute the validity of the debt. Well i called them and asked to send me a letter or a bill from the school that I owed them money and until now I have not received one. I live in NJ. My question is.. If the debt still valid? it's been over 10years and this is the first time I've received a letter from the debt collectors. Can this affect my credit? Thanks for your help.

    ReplyDelete
  44. Is this being reported by the credit union or a collection agency that bought the account? My guess would be a collection agency. If I were you, I'd fire off a letter to the collection agency letting them know that this account is beyond the legal reporting period and by reporting it they are violating Section 605 of the Fair Credit Reporting Act. Demand that it be removed immediately. If they don't remove it, notify the credit bureaus of the problem and try to back up your claim with proof, such as an old copy of your credit report with the expiry date and account highlighted. If all else fails, sue. You have the right.

    ReplyDelete
  45. I had a car repo back in may 2009, the statute of limitations in NC is 3 years on repos so the sol should have been up in may 2012.. The original creditor has it listed on my report as a charge-off, Asset Recovery has added another collection and dated it Jan 2012..Upon further investigation I saw that a payment was reported in Dec. 2011 that I know I never made making it appear on my credit reports as though the sol has not yet been surpassed!! I have been working with Lex Law but they have sent out letter after letter for the last 6 months and nothing has yet been done about the false date reported to the credit bureaus.. Asset was taken off once and my score went up to 735 but it was then added back on dropping the score back down to 638.. Is this a common practice and legal for Asset to do and if not what more can I do about it?

    ReplyDelete
  46. This comment has been removed by a blog administrator.

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  47. Happy New Year Lee,
    Are still available for questions?
    I understand you have a lot of work, please let me know, if I can post my case.
    Thanks a lot

    ReplyDelete
  48. My brother opened a credit card under my name and soc security number in 1998. The last date he paid it was March of 2003. (I was not aware of any of this going on) Sadly my brother passed away in 2005. I am trying to purchase a home and see that the creditor first reported that the last date paid was 3/2003. Now they are showing a $50 payment made on 6/7/2007 - and then nothing again after that. My brother had been deceased 2 years prior. So after 4 years there is a random payment of $50 in 2007, then nothing ever since.... this is ridiculous. The creditor says I have to do a fraud investigation on the original debt from 1998. My issue is this $50 payment. Did the collector make this up to re-age the debt? What is the correct verbiage I should use with the creditor to get proof of this "$50" I don't have 30 days to wait on this house. I want it totally deleted from my credit report. Any advice would be greatly appreciated

    ReplyDelete
  49. If you are a new net user afterward you need to visit constantly this web page and read more the updated posts at same here. www.creditrepair.com

    ReplyDelete
  50. Hello Lee,

    I have a collections from Rentdebt saying that I owed $5,000 from an apartment. I never received anything from the apartment complex and we were paid in full when we moved out.

    We have disputed this with Rentdebt Collections and the credit reporting agencies and nothing has changed until just this week. Now Rentdebt is postin on our Credit that the new amount awed is $8,400 and that the account is closed and we just made a payment on it. We have never made a payment on this. On top of all this the have changed the date opened to May 2012 from April 2012 and the new first reported date is May 2007 and it was July 2012! We didnt live in this apartment in 2007. We moved in 2010 and moved out 2012. What does this mean??

    ReplyDelete
  51. Hello!

    Back in 2008, my dad was evicted from his apartment due to special circumstances (it's a long story, but I do know it was not my father's fault). But anyway. I wasn't living with him at the time, but I was a co-signer, as he had bad credit, and I didn't have any credit, as I was just starting back then (I was 21). They accepted him because I was co-signing with him.

    Anyway, there was a problem and he was evicted. He couldn't pay the full amount of $5,909.00. So it was reported as a collection to the credit bureaus. This account was officially opened on 11/18/2008 (this is what I see on CreditKarma and TransUnion. Since that date, neither I nor my father have contacted the creditor (it's a law office). AT ALL. Not one phone call or letter. Today I got a notification from CreditKarma that a new delinquent account was added to my account. I was confused because the few credit cards I have, I always pay in total and on time. And this is when I saw the the collection agency RE-OPENED my account. It was reoped on 3/4/2014. Not only that, but the amount has gone up. Back in December 2013, the amount was in the $8ks, now it's up to $9k. I take it they are charging interest.

    But what looks fishy is that it's been more than 4 in years (but less then 7, this debt was supposed to disappear from my report next year...) What can I do in this situation? I know per law they can not sue me if it's been more than 4 years (I live in California), but being as the account has been re-opened/re-aged...

    Thanks for any help you can give me!

    - Christina

    ReplyDelete
  52. I have a creditor that keeps reporting major derogatory to my credit report every week. Sometimes twice a week. Will this bring my score down every time they report it? Its a $180.00 balance.

    ReplyDelete
    Replies
    1. Since your question is a common one, I made it into a Q&A post so that other readers can benefit as well. Copy the URL below and paste it into your browser bar to find the post:

      http://collectionagencydebt.blogspot.com/2014/09/q-collection-agency-keeps-updating.html

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