Can collection agencys legally re-open an old account as a "new collection account?"?
So here’s what happened:
I check my credit report, and my husbands monthly through a credit monitoring program called, "my credit keeper" I last checked my report as well as my husbands Jan 01, 2010 and my scores were good and my husbands were in the range needed for us to buy a house about a 640.
We just started doing the paper work for a home loan and of course they ran both of our credit reports and all of a sudden a "new collection account" showed up on my husbands report!
Apparently an old collection account from about 4 years ago was bought buy a new collection agency and they re-opened it as of Jan 18, 2010 showing the original reporting date as the same, Jan 18, 2010.
This action plummeted his score all the way below a 600! I am under the impression that this is illegal because they would be extending the statute where derogatory accounts can only be on your credit for 7 years. so technically this should be off in 3 but by their (collection agency) standards it will be there until 2017…
The agency is really hard to deal with (super nasty) and I am just thinking of getting a lawyer to handle it. Just was wondering what others thought and if this is truly illegal.
Thanks for the advice, fortunately we have pretty much no debt its just that this one account is so old that surprisingly it will not affect my husbands score is a positive way to even pay it so we rather just keep saving our money for a house. I just wanted to make sure this practice so that I wasn’t wasting my time with a lawyer today. Its a shame that companies can’t just act within the law and that I am driven need legal services for something like this! I just want to buy a house darn it! 
Oh and please excuse my spelling and grammar errors in my "details added!" sorry.
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March 7th, 2011 at 6:43 pm
The answers you are getting are not correct. Yes they can report it BUT they can’t re age it to appear as if it is new debt.
You need to dispute it asap. If you have any documentation from an earlier date, include a copy. Let the credit reporting agency know the account has been in default for 4 yrs. They will investigate and will then either adjust the date or delete it.
Also, you should send the collection agency a request for validation. Do a search on that. Basically you are making them send you proof . Tell them straight up that they are reporting an incorrect date and to prove that was the date it was in default. Have them send you a copy of the orginal agreement with the original lender.. Don’t accept a statement on letterhead. They need to send you proof.
the thing is, you will not be able to buy a home with any outstanding debt so if it doesn’t gt deleted by the CRA-you will have no choice but to pay it. Also do not let the collection agency know you are trying to buy a home. They will never settle if they know that.
March 7th, 2011 at 6:43 pm
This has recently happened to me, except the account is from 2000 in a diffrent name and not mine, i am wondering if these "credit report sites" are actually accurate. Since joining one this has appeared on my file, the credit score is not accurate either, because for the last 3 months i have paid £5.95 for the updated score and it comes out the same with the same info on what i owe, dispite the fact that i owe less than that and have done the entire time. I then joined equifax who provide a credit report free, this shows everything in detail, the company chasing me is Akita Kapital, but with Equifax you can raise an online dispute with anything you disagree with on your account. Also the re are alot of "debt companies" who buy this info then send scary letters, if 3000 people respond and pay £100 each on a devt that is written off then they are making a tidy profit. Lowell contacted me for a "debt" on an old HSBC account, what had jappened was a n unauthorised cheque had been cashed and i had a fine, HSBC could never provide a copy of that cheque and so apologised and wrote off the £125.00 as there mistake and iclosed the account, then 12 years later i get this letter. I went ballistic especially when i questioned the girl on the phone, it turned out that lowell was HSBC owned, i told them where to stick it. These companies are no better than the "you have been selected for this huge crossword prize", they are often owned by the banks and being used to earn extra cash.
Natalie
March 7th, 2011 at 6:43 pm
Hi Erika,
Unfortunately it is common practice, and is legal (albeit unethical and a downright pain). As long as a debt is outstanding – ie remains unpaid – then it can be sold on to alternative debt collection services, and this can happen any number of times. My advice to you is, if you or your husband still have outstanding debts you are struggling to pay, it might be a good idea to look into a debt management plan. This can help you freeze any interest and negotiate a reduced monthly payment.
1stopmoney.com can help point you in the right direction.
March 7th, 2011 at 6:43 pm
Yes they can. They are in the business to collect overdue payments. You tipped them off you were planning to buy a home by your constant checking of your credit history. Your choice is pay the bill or not get a mortgage