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Jul 25, 2006 10:46 pm US/Central
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Collectors Accused Of 'Re-Aging' Consumer Debt
by Bennett Cunningham
DALLAS (CBS 11 News) ―
Debtor collectors are being warned. The federal government is listening to consumer complaints and mulling over new rules to make sure you get a fair shake.
Experts say the potential change in the law comes at the perfect time.
Tonnea Williams loves her family but she has a different kind of "love" for one special debt collector. "The fact that they can just come in and step on my dream - that was very hurtful"
In 1995, William's fell on hard times and owed Discover Card about $3000. She never paid it. In 2005, that debt popped up on her credit report at the same time she was trying to get a low interest mortgage for a new home.
Federal law forbids reporting negative information on a credit report after seven years. Williams didn't get the lower rate and she says it cost her lots of money over the life of the mortgage.
The debt collector is Allied Collection Services of California LLC. According to Allied, once it received written notice from Williams of the possible error - it immediately corrected the problem.
William's said the correction was too late and filed a federal lawsuit. She says she doesn't believe this was a simple error and alleges Allied illegally, 're-aged' her old debt… meaning they turned back the clock.
Here's how Williams says it worked. Williams's debt occurred in 1995. Allied claims she made a $25 payment into the account in 2001- changing the age of the debt from 1995 to 2001, and resetting the clock on reporting bad debts. When Allied bought the debt it felt proper to report it for another seven years, until 2008.
Williams says, Allied is mistaken. According to the National Consumer Law Center, the 're-aging' of old debts is one of the most frequent errors by debt collections agencies and debt buyers.
Allied calls the lawsuit against them a, "complete shakedown."
"That is why the lawsuit was important to me. I want you to be accountable. I want you to see how you hurt my family," Williams said.
Offers to settle the lawsuit are still on the table. So far, no trial date has been set.
(© MMVI, CBS Broadcasting Inc. All Rights Reserved.)