Reaging debt, or resetting the clock on default, can be illegal. Reaging is when your creditor resets the account due date back to current. It’s one thing if you ask for this, but not all creditors are willing to do so, and they must follow federal guidelines when deciding whether or not to reage your accounts. Creditors may only re-age your account once in a 12-month period and twice in a five-year period for open-ended accounts (credit cards, charge cards, store cards etc.). Important, if you haven’t agreed to have the debt reaged, your Fair Credit Reporting Act rights have likely been violated.
To be considered for re-aging:
- You must demonstrate a renewed willingness and ability to pay;
- Your credit card account should be at least 9 months old;
- You need to make at least three consecutive minimum monthly payments;
Creditors DO NOT have to reage past due accounts. Some creditors never re-age accounts, some will only reage an account one time and other creditors follow the federal guidelines that allow once in a 12-month period or twice every five years. It simply depends on the creditor’s reaging policy.
Some creditors will re-age past due accounts if you agree to enter a debt-workout program or debt-management plan. Once enrolled in a debt-management program, creditors typically charge lower interest rates, stop charging late fees and re-age the account, bring it current. Be careful! Only sign up with a debt management company that you can trust. There are thousands of credit-counseling and debt-consolidation companies looking to make a quick buck by preying on stressed-out, financially vulnerable consumers. Some companies are guilty of shoddy service and sky-high fees and others are huge scams.
Don’t ask for re-aging if you will not be able to keep up with the payments. In other words, don’t waste your reaging opportunity! It’s better to wait until you can truly keep up the payments before approaching your creditors and asking them to re-age your account. When asking creditors to reage your accounts, be sure to get it in writing! If your creditor won’t put the details of your re-aging program in writing, do it yourself. Keep a record of the conversation and send a copy of it to your creditor (keep a copy for yourself).