THE FACTS ABOUT RE-AGING

Posted by Why Chat (209.240.222.130) on May 29, 2002 at 20:44:09:

There have been several posts about re-aging for credit reports.Most people think it is completely illegal under the FCRA and can't be done as "threatened" by CA's. Let me explain- THEY ARE NOT THREATENING!The concept of re-aging is supposed to be a GOOD idea! Here is an excerpt from the FCRA that deals with HOW an account may be re-aged legally.
Placement for Collection
  The term "placed for collection" means internal collection activity by the creditor, as well as placement with an outside collector, whichever occurs first. Sending of the initial past due notices does not constitute placement for collection. Placement for collection occurs when dunning notices or other collection efforts are initiated. The reporting period is not extended by assignment to another entity for further collection, or by a partial or full payment of the account.
*** However, where a borrower brings his delinquent account to date and returns to his regular payment schedule, and later defaults again, a consumer reporting agency may disregard any collection activity with respect to the first delinquency and measure the reporting period from the date the account was placed for collection as a result of the borrower's ultimate default.***
**** A consumer's repayment agreement with a collection agency can be treated as a new account that has its own seven year period.****
{{4-29-94 p.7196.01}}

THE FOLLOWING IS WHAT THOSE POSTERS ON THIS FORUM ARE REFERRING TO WHEN THEY SAY AN ACCOUNT CANNOT BE RE-AGED
2. Charge to Profit and Loss
  The term "charged to profit and loss" means action taken by the creditor to write off the account, and the applicable time period is measured from that event. If an account that was charged off is later paid in part or paid in full by the consumer, the reporting period of seven years from the charge-off is not extended by this subsequent payment.

3. Reporting of a Delinquent Account That is Later Placed for Collection or Charged to Profit and Loss
  The fact that an account has been placed for collection or charged to profit and loss may be reported for seven years from the date that
** either **
of those events occurs, regardless of the date the account became delinquent. The fact of delinquency may also be reported for seven years from the date the account became delinquent.
  
HERE IS ANOTHER EXCERPT (WITH A LINK BELOW TO THE FULL ARTICLE)
The third committee will try to convince federal regulators that recently enacted requirements on re–aging of delinquent debtor's accounts need to be loosened. A credit grantor can re–age a debtor's account if the he makes three consecutive monthly minimum payments or a similar lump–sum payment.
Re–aging an account gets the debtor off the delinquent rolls and allows him to start fresh with the credit grantor. Creditors seek to re–age accounts to reduce the number of accounts classified as delinquent or as a loss. Both Washington and Wall Street frown on banks with high delinquency and loss rates. In June of 2000‚ the Federal Financial Institutions Examination Council set policy that allowed creditors to re–age an account once in a 12–month period and twice in a five–year period.
Wiggle Room
But Cullinan says the policy doesn't allow wiggle room for each debtor's individual situation. For example‚ a debtor may start a debt–management plan with one of the questionable counseling agencies and his account will be re–aged. Soon‚ he realizes the agency is bad news. "But they've already gone through re–aging and can't be re–aged again‚" says Cullinan.
And when the debtor changes agencies‚ "it's inevitable that a payment will be missed in transition. Now they're in a real bind. And their credit could be in real bad shape‚" he says.

• Re-aging

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