Definition
When a creditor re-ages an account, they restore the payment status to “on-time” and adjust the minimum payment back to a normal amount.
Analysis
There are two primary instances in which a creditor will agree to re-age a credit account.
- Hardship: If you fell behind on your payments and work with your credit card issuer, they may be willing to grant a temporary hardship. For this to occur, you must:
- prove that a substantial event, such as a job loss or hospitalization caused the delinquency
- convince them that your situation is temporary and can be fixed within 6 months.
- Debt management program: A debt management program may be more effective for negotiating a re-age on multiple accounts since creditors are often reluctant to approve a hardship. Additionally, a debt management program is designed for debt elimination over the course of 3-5 years, whereas a hardship is only designed to help you regain and maintain on-time payment status for a temporary situation.
There are two primary constraints for re-aging. The first we have mentioned above, which is a reluctance for creditors to forego potential revenue from late fees, over-the-limit fees and higher finance charges. The second constraint is a limitation on re-aging. A debtor cannot expect a creditor to re-age an account more than twice over a 5 year period. This means that finding a solution to help you gain control of your finances and eliminate your debt is essential.
