DEFINITION of 'Re-Aging Debt'

Re-aging debt is a restart on the clock on a debt’s statute of limitations. Re-aging debt can happen if a borrower talks to a creditor about an old debt or make a payment on an old debt. Re-aging debt is good for debt collectors because it gives them greater legal ability to collect a debt. Re-aging debt is usually bad for consumers because it puts them back on the hook for paying an old debt.

BREAKING DOWN 'Re-Aging Debt'

If a creditor contacts a borrower about repaying an old debt, it may be best for the borrower to not say or do anything until they find out whether they legally owe the debt. If they accidentally re-age the debt, they could become responsible for paying something that was past the statute of limitations or that they previously had discharged in bankruptcy or settled with a creditor. The borrower could have to prove they are not responsible for the debt while also trying to make sure the creditor does not report the unpaid debt as delinquent.

Other Causes That Trigger Re-Aging Debt

Re-aging debt could also happen because old, unpaid debt gets bought and sold by debt collectors in a secondary market. These collectors often have no idea whether the debt they are purchasing is legitimate, was the result of identity theft, was paid off, was forgiven by the creditor or is past the statute of limitations.

The reason the age of a debt matters is because of the statute of limitations. This period typically lasts from three to 10 years depending on the state of jurisdiction that applies to the debt and the type of debt. Once this period is up, a creditor cannot sue a consumer for an unpaid debt. If the debt is acknowledged, however, the borrower may have to pay the debt in full or reach a settlement.

Unethical debt collectors might also illegally re-age a debt by reporting it to credit bureaus after they purchase it in the secondary market, even though they have no idea how old it is or whether money is actually owed. If this happens, a borrower can report the debt to the credit bureau as inaccurate, which should result in the debt collector having to prove the validity of the debt.

There is one good type of re-aging; it occurs when a borrower works out a debt repayment plan with a creditor and they agree to stop reporting the account as delinquent. Instead, they re-age the account and report it as current, which can improve the borrower’s credit score.

RELATED TERMS
  1. Time-Barred Debt

    Time-barred debt is money a consumer borrowed and didn’t repay ...
  2. Zombie Debt

    Zombie debt is debt that has "risen from the grave" when debt ...
  3. Satisfaction and Release

    When a debt that is due under a court judgement has been paid ...
  4. Debt

    Debt is an amount of money borrowed by one party from another, ...
  5. Net Debt

    Net debt is a metric that shows a company's overall debt situation ...
  6. Debt Buyer

    If a debt becomes delinquent and the lender sees few options ...
Related Articles
  1. Personal Finance

    How the debt collection agency business works

    Understanding how the debt collection business works will give you a better chance of coming out ahead if you ever have to tangle with a collection agent.
  2. Personal Finance

    How To Beat Off A Zombie Debt Collector

    Sounds like a bad horror movie, but it really could happen to you. Here's how to identify zombie debt and send collectors back to the dead-debt graveyard.
  3. Personal Finance

    5 Unethical Collection Scams That Consumers Should Be Aware Of

    Here are a few of the ways that scam artists prey on those in debt.
  4. Personal Finance

    Debt Collection: Know Your Rights

    Learn about the debt collection process so you know how to handle it if it happens to you.
  5. Investing

    Will Corporate Debt Drag Your Stock Down?

    Corporate debt can mean a leg up for firms, or the boot for investors. How to tell the difference.
  6. Investing

    What Debt Collectors Can And Cannot Do

    The Fair Debt Collection Practices Act now regulates the actions and behaviors of debt collectors in order to protect you.
  7. Personal Finance

    Debt Settlement: Cheapest Way to Get Out of Debt?

    Debt settlement is not for everyone, but for those seriously in debt it may prove an effective means of solving the problem.
  8. Personal Finance

    Debt After Death: Do Kids Owe for Parents?

    More and more Americans are dying while in debt. Are children responsible for the debts of their parents? What’s the scoop on parental debt after death?
  9. Personal Finance

    7 Tips For The Do-It-Yourself Debt Manager

    Hired gun not in your budget? Learn to be your own credit counselor.
RELATED FAQS
  1. Debt and collection agency

    Find out what happens when your debt account is sold from one collection agency to another and the impact on your balance ... Read Answer >>
  2. Do I still owe debt collectors for a debt that's past the statute of limitations ...

    Learn more about the statutes of limitations that govern certain personal debts and why you maintain obligations as a debtor ... Read Answer >>
  3. Why would you look at a company's net debt rather than its gross debt?

    Learn the difference between net debt and gross debt, how to calculate debt using a company's financial statements and why ... Read Answer >>
Trading Center