FCRA Violation – Re-Aging and Zombie Debts

All,

I wanted to alert you to credit phenomenons called, “re-aging” and Zombie Debt.

First, re-aging is when the date of last activity or delinquency gets updated to a date closer to the present date.

Re-aging is not always sinister nor is it always a violation. For example, if you have a car loan and are current on it the finance company will likely update your three major credit reports that you are current and that last month was the last date of activity. Argue if this is technically re-aging, but there is no problem here.

Where re-aging becomes a problem is when you are collections and this is usually what people are referring to when they discuss re-aging issues. A typical example of this might be if you get a call from a collector on a 6 year old debt. The debt collector asks you to make a “good faith” payment of $5 to show that you are a good person. You are a good person so you agree. You just re-aged the account. Instead of waiting a year for the debt to be outside of the statute of limitations, you now have to wait seven years as the last date of activity has been re-aged.

This sounds sinister, but it gets worse for the consumer. Often, when a collector acquires a defaulted account they will put the date of delinquency that they entered the account in their system or make up a date. That makes your defaulted account like new! This is a violation of the FDCPA and could change you date of delinquency by months, years or decades (see Witt v Experian Info Services, 2008).

The credit reporting agencies then report the dates the furnishers of information send them. These debts get sold over and over. The effect is that your debt never goes away.

The federal government has gone after collection agencies in the past with the FTC. In the federal case The United States v NCO  (2000), NCO was fines 2.5 million dollars. This is not a lot of money to them in case you were wondering.

If you are the victim of re-aging you can hold the collector liable after disputing the debt. If the dispute comes back as verified you have a solid lawsuit against the collector under 15 USC 1692e(2)(A) (see Rosenberg v Calvary, 2005).

Lastly, Zombie debts are old credit issues that are rolled into new lines of credit. An example of this is if you owe an original creditor $400. They offer you a new credit line with a $500 credit limit then roll your old debt into the new credit line. This re-ages the debt. This is also a violation of the FCRA (Carbajal v. Capitol One, 2003).

All of these re-aging and Zombie Debt violations erode the integrity of the credit system and are a violation of federal laws. These will continue to plague consumers until we stand up and fight. No one can fight for you. These are easy Pro Se lawsuits to go after. If I can be of help, please let me know.

Fight the good fight now…

Boiler