What does re-aged debt mean for your credit report?

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Re-aged debt occurs when a creditor resets your debt’s timeline by updating the “date of last activity.” While it might look like progress because of partial payments or new payment plans, it doesn’t reduce debt or remove negative marks from your credit report. It’s legal, but transparency is key.

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Question

What is re-aged debt? I’ve heard the term re-aged debt and want to understand what it means. Could this affect my credit report, and is it legal?

From: Anonymous Question, Saskatchewan (SK)

Debt Insiders Answer

Re-aged debt is when a creditor updates the ‘date of last activity’ on an overdue account, basically resetting the timer on how long the debt appears to have been around. This can happen if you make a partial payment or if you and your creditor agree on a fresh payment plan. Although it might seem like you’re in a better spot with your payments, it’s crucial to know that re-aging does not cut down the debt you owe and can affect your credit report by prolonging those pesky negative marks. Yes, it’s legal, but creditors in Canada must play by the rules, ensuring they communicate and document any changes in your payment terms clearly. Dive deeper into how debt collections and re-aging can reshape your financial picture by checking out resources on debt collectors.

From: Anonymous Question

Office of the Superintendent of Bankruptcy (OSB) Answer

Re-aged debt refers to the practice of changing the date of a debt to make it appear as though the debt is newer than it actually is. This can be done to extend the collection period or to improve a creditor’s chances of collecting the debt. It often involves resetting the delinquency date, which can adversely affect your credit report by indicating that you have a new late payment.

Re-aged debt is generally considered a legal practice in Canada, but it may not always comply with fair debt collection practices. If a creditor is re-aging your debt without your consent or mishandling reporting, it could violate regulations set forth in the Bankruptcy and Insolvency Act or related regulations, particularly regarding the accuracy of information in credit reports as outlined in the Credit Reporting Act.

For specifics, the relevant legislation can be found in the Bankruptcy and Insolvency Act (RSC 1985, c B-3) and related regulations, which govern the conduct of creditors and the reporting of debts.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 most frequently asked questions related to “What is re-aged debt?” based on common concerns and trends:

1. What is re-aged debt and how does it affect my credit score?

Re-aged debt involves changing the date of delinquency, making the debt appear newer and potentially harming your credit score.

2. How can debt collectors re-age my debt, and is it legal?

Debt collectors can re-age your debt by changing the delinquency date, but this is illegal if it involves reporting incorrect information to credit bureaus; however, it can be legal if it involves a repayment plan agreed upon with the creditor.

3. What actions can trigger the re-aging of my debt?

Actions such as making a payment or acknowledging the debt can trigger the re-aging of your debt, restarting the statute of limitations.

4. How does re-aging debt impact the statute of limitations?

Re-aging debt can reset the statute of limitations, giving creditors more time to take legal action to collect the debt, even if the original time limit had almost expired.

5. Can I stop or dispute a re-aged debt on my credit report?

Yes, you can dispute a re-aged debt by filing complaints and providing evidence that the debt is outside the statute of limitations or that the re-aging was done incorrectly.

If you have a question about debt see our debt questions or ask your own debt related question.

References

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