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.


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.

  1. Time-Barred Debt

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

    A charge-off is a debt that is deemed unlikely to be collected ...
  3. Satisfaction and Release

    When a debt that is due under a court judgement has been paid ...
  4. Cancellation of Debt (COD)

    Cancellation of debt (COD) occurs when a creditor relieves a ...
  5. Cost of Debt

    Cost of debt is the effective rate that a company pays on its ...
  6. Debt Ratio

    The debt ratio is a financial ratio that measures the extent ...
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

    Outfox the Debt Collector's Hounds

    Dealing with a collection agency is scary if you don't know your rights. We help you take back the power.
  3. Personal Finance

    Will Paying Off Old Debt Boost Your Credit Score?

    Learn why paying down your debts may not always be the fast-track to improving your credit score.
  4. Insights

    How Debt Limits A Country's Options

    While debt is fundamentally necessary to the operation of a national government, it can also be limiting and dangerous.
  5. Personal Finance

    Why Debt Isn’t Always a Bad Thing

    When managed properly, debt can be used to achieve a higher overall rate of return.
  6. Small Business

    The Dark Side Of Debt Collection

    Debt collectors are becoming more aggressive, and have found "legal" ways to function outside the law. Know your rights and how to counter these new methods.
  7. Investing

    Does 2016 Spell the End of a Global Debt Cycle?

    Examine the growth of global debt from 2010 to 2015. Emerging market debt has grown significantly, while advanced economy debt has grown marginally.
  8. Personal Finance

    How To Manage And Consolidate Your Own Debt

    With debt management services costing a lot of money, this article looks at why it is better to manage your own financial liability.
  9. Investing

    Debt Ratio

    The debt ratio divides a company’s total debt by its total assets to tell us how highly leveraged a company is—in other words, how much of its assets are financed by debt. The debt component ...
  1. 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 >>
Trading Center