Friday, May 30, 2014

Q&A: Has My Credit Card Debt Been Re-aged?

Hi Lee, 

I've been reading your Collection Agency blog. Thank you so much for doing this- it's been very helpful. 

Seven years ago, I defaulted on my credit cards due to a long period of unemployment.

Much of this debt should have fallen off my credit report in April and the SOL expired in my state in 2011 for some of the debt and 2012 for the rest of it. I stopped making most of my payments in March 2007. The Credit Bureau told me that it depends on when the creditor reports me as delinquent. 

In 2012, I disputed a few instances of re-aged debts with the Credit Bureau, but they told me at the time not to worry about the collection account's difference in reporting dates-- that they knew the original creditor's date of first delinquency, and that the collection agency's date of reporting didn't matter. When I contacted them again this April to ask why the debt hadn't fallen off my report, they claim to need information to make a change to the report. Should I send them the copy of that dispute I made in 2012? I am not sure what to do. I assumed the debt would fall off automatically. In one case, the date of first delinquency is reported as 2009, but that's well over 2 years after I stopped paying.

Equifax said the debt remains for 7 years, but I've read some blogs that say 7.5 years, so I'm confused on this. What is considered the first 'delinquent' date? In California for purposes of the SOL, it is considered the last time you made a payment. Would this be considered the Date of First Delinquency to the Credit Bureau? Or would it have been when the cards were 180 days past due? I know I was reported with a 30 day late in April 2007.

Thanks so much for your advice. 



The credit reporting period works like this: Federal law requires the credit bureaus to remove your delinquent debts after seven years, but the seven-year clock doesn't even start ticking until your debt is 180 days old. The clock for the 180-day period begins ticking on the date of your last payment. The reason it takes 180 days to start the 7-year reporting period is that the 180-day mark is the point where most credit card companies "charge-off" the debt. That doesn't mean the debt is gone, of course, its simply to get the bad debt off that year's books for accounting and tax purposes. 

Of course, during this 180-day period, the debt is probably going to show up as delinquent on your credit report. That means that, although the credit reporting period is technically only seven years, its normal for a debt to hang around on your credit history for 7.5 years before being removed. 

If your debt was 30-days delinquent in April of 2007, that means that the credit reporting countdown didn't begin on the debt until September of 2007. Thus, don't expect the credit bureaus to remove it until September 2014. And they were right to tell you that they know the original delinquency dates--they do. The original creditor's automatic reports to the credit bureaus always contain dates. These dates don't always show up on your credit report, but they're there. The dates you see on your credit report for collection accounts generally reflect the date the collector first received or first reported the debt--not the original date of first delinquency from the original creditor. 

The statute of limitations for lawsuits is a totally different beast from the credit reporting period. The statute of limitations refers to the period of time in which a creditor can sue you for the debt. The statute of limitations for debt is calculated from the date of your last payment, and it doesn't carry the same 180-day "waiting period." The bad news, of course, is that if you make a payment you restart the clock on the statute of limitations and the collector regains the right to sue you. Making a payment does not, however, have any effect on the 7.5 years that a negative item will remain on your credit report. 

Long story short, you don't need to send the credit bureaus anything. Their computer system has the original dates on record and should automatically remove the original creditor's tradeline and the collection account attached to the debt in September. Just to be safe, consider pulling your free credit reports this October to ensure that both negative accounts are gone. 

Best of Luck,

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  1. Thank you, Lee! This is so helpful. You just cleared it right up for me. :-)


  2. Question on that 7 year period. It looks like it is from when the debt became delinquent not when it is charged off. It sounds like you're giving an additional 6 months for that to remain on a credit report which isn't allowed by law.
    "Mary Myers’ credit card account becomes delinquent in April 2011. Mary makes partial payments for the next five months, but never brings the account current. The creditor places the account for collection in January 2012. Because the account was never brought current during the period partial payments were made, the delinquency that immediately preceded the collection began in April 2011, when Mary first became delinquent. The correct delinquency date is April 2011."