Question: I have been working on repairing my credit for two years and running across this today has been a blessing. The abundance of information is truly helpful. In regards to my credit report, I have been monitoring it for some time. In the past few months I noticed my score dropped by over 100 points, and I haven't made a late payment in over five years.
It has come apparent that three old debts filed as charge-offs were purchased by new collection agencies (Jefferson Capital, LVNV Funding, Midland Funding) and were recently reported as collection accounts now and have reported me 30 days past due.
It is very disheartening as I have worked so diligently to repair my credit and pay everything on time. I've read numerous articles on re-aging and the statue of limitations being manipulated from CA's, but I was curious if buying a charged off debt and reporting it as a collection and 30 days late is illegal or re-aging?
It doesn't seem right because it's inaccurate and false. The fact they can report 30 days late when the account hasn't had activity in over 5 years just has me baffled a CA can do that and impact my score so much with this. Any advice, input, or thoughts in regards to this would be greatly appreciated. Thanks in advance for your assistance and the amazing site helping people with their financial futures.
Answer: First I would like to congratulate you on tackling and monitoring your credit. It can become like a second job but it's well worth it! A collection agency should not be reporting a collection account 30 days late as the current status. You did not open an account with the collection agency, they purchased the bad debt.
Purchasing a bad debt does not make them the original creditor. Only the original creditor can report you as 30, 60, 90 or even 120 days late. Monthly status codes related to delinquencies do not apply to collection agencies.
The collection agency should be limited to reporting information such as:
- Date the collection account was opened
- The original amount owed along with the current balance and whether the account has been paid or unpaid
- No monthly delinquencies should be reported.
Unfortunately you are dealing with 3 of the most unscrupulous debt collectors that will blatantly violate the Fair Debt Collection Practices Act along with the Fair Credit Reporting Act. You will have to vigorously fight this.
You are not dealing with a re-aging matter. Re-aging occurs when the creditor or debt collector changes the FCRA Compliance Date. This date determines how long negative credit can remain on your credit report. Most negative credit information can remain on your credit report for 7.5 years (7 years + 180 days) from the date of the first delinquency with the original creditor.
Even if a charged-off account bounces from debt collector to debt collector, that account can only be reported for 7.5 years from the date of first delinquency with the original creditor. Once the original creditor establishes the date of first delinquency it cannot change. If it does change, then re-aging has occurred.
The important fact to remember is that unpaid debt can follow you for years, until it is paid. However unpaid debt can only remain on your credit report for 7.5 years. And, after the statute of limitations has passed (depending on the state where you live or the state where the debt was incurred), you are no longer legally obligated to pay the debt. This means you cannot even be sued for payment once the statute of limitations has passed.
Here are some options to consider:
1. Request debt validation. It seems as though the debt collectors did not send you a dunning notice as required under the FDCPA. Send a debt validation request and include you can only be contacted through written communication as telephone calls are inconvenient. You always want to avoid telephone contact with any debt collector.
2. Avoid any credit card offers from Jefferson Capital. Jefferson Capital may offer you a credit card in exchange for putting all or part of the old debt onto the credit card. Do not fall for this. If you agree to such an arrangement you will re-start the statute of limitations on the debt which will be just like starting over. You open yourself up to a debt collection lawsuit as well as re-starting the clock on the 7.5 year credit reporting because you now have a new credit card account.
3. Dispute the 30-day late reporting. As you stated it is inaccurate. Dispute with the credit bureaus and see if they remove it. Since the debt collectors reported to the credit bureaus a 30-day late, they are now subject to the Rules of the Fair Credit Reporting Act. Dispute under FCRA 611(a) which says you can challenge the completeness or accuracy of any item of information contained in your credit report and a reasonable reinvestigation must be conducted or the item must be deleted.
A sample letter would say something like this:
“Under FRCA 611(a) I am disputing the completeness and accuracy of the information being reported to you by (name of debt collector, their address and account number).
I dispute this debt as I have never opened an account with this collection agency therefore; the collection agency is inaccurately and erroneously reporting a 30-day late notation. I request an investigation and removal of this collection account from my credit report.
Additionally, under FRCA 611(a)(2) you are to forward this dispute along with “all relevant information regarding the dispute” to the collection agency within five days of this request; and, you are to provide me written notification of their investigation along with your reinvestigation within 30 days of the date of this letter.
Please be advised that I will not accept the typical automated E-Oscar verification process as it is not a true reinvestigation of the disputed item. Thus, should you receive verification from the collection agency based on the E-Oscar verification method, I further request you provide a full description of the procedure used to determine the accuracy and completeness of the disputed item under FCRA 611(a)(6)(B)(iii).”
(This is just a sample letter please revise as needed).
4. Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau oversees the credit bureaus. After you dispute with the credit bureaus first and the issue remains unresolved take your complaints to the CFPB. They are good at handling consumer complaints and the credit bureaus will not ignore them. To file a complaint visit: CFPB Submit a Complaint.
Lastly, do not allow this temporary setback to dissuade you. The older the collection accounts get the less negative effect they have on your credit score. The initial drop in points may have hurt your credit score but do not stop doing what you’ve been doing. Continue paying your bills on time and keeping your current credit card balances low. Your credit score will improve over time with continued on-time payments of your current creditors. The best of luck to you.