It has been seven years since you declared bankruptcy or the statute of limitations on debt in the state where you live has run out. The bill collectors finally stop calling. You are finally on a path towards financial stability. Yet your credit score is low, probably low enough that you should not be receiving offers for credit cards in the mail. Then one day out of the blue you receive a card offer. You set the offer on the kitchen table and look at it longingly, thinking about how nice it would be to be able to reserve a car or hotel room without giving up your debit card number.
You finally give into temptation and read the offer; the interest rate is a little high, but, at this point you are only planning on using it rebuild your credit rating. You respond to the offer; however, you missed the fact that this card is being offered by a collection agency and the fine print, if it is even there, says:
…[I]f a debtor agrees to make even a single payment on an expired debt, the clock starts anew on some part of the old obligation, a process called "re-aging."
All of the debts you thought you had left in the past ... they are now back. And that firm financial footing you were once on—well, it is not so firm anymore.
Why are collection agencies turning to this method of “re-aging” old discharged debt? For one, it costs them virtually nothing. If you do not take the bait they are out a few pennies for your debt, the price of postage and the cost of a mailing, peanuts to them. If you do take the bait, you had better start ponying up some cash for the debt you thought was gone. Old debts are now new again. If you fail to pay, the bill collection cycle starts all over again.
The financial institutions (i.e. banks, collection agencies, etc.) that push these cards state that they are only doing this because you “deserve another chance.” I am not buying that argument. These companies are buying up retired debt for pennies and then turning around and offering people credit, in some cases not telling them about the retired debt that comes with it, just so they can make a buck.
Once a debt is retired it should stay that way. This is just more bloodsucking by the financial industry (I use the term “industry” loosely, industry normally means you produce something, and unless you count pain, suffering and heartbreak the financial sector produces nothing).
My eleven, soon to be twelve-year-old, son read the article about retired debts. His response: “The world would be a lot better place if there was no greed.”