The Statute of Limitations on Debt Collection

What happens to those outstanding debts owed to your company? Are these lost forever? Often companies simply write off the debt collection, without ever thinking about pursuing the money owed. What is your company’s plan of action? 

Let’s first understand what it means for a Statute of Limitations (SOL) on past due bills. The SOL is the point in time when the debt collector or creditor files a lawsuit to get back money owed, which is the debt. Each state is different with its laws that rule the legal window of time when a creditor or debt collector can sue for collection of bad debt. 

The general rule of thumb, in regards to the Statute of Limitations (SOL), follows that a creditor or debt collector cannot pursue collection after a six-year period from when the debt was written off or the date of last action on credit report. If the SOL phase has ended, it does not necessarily mean a lawsuit can’t or won’t be filed; it does, however, provide an easy path for dismissal of the suit. 

Does your company have a defined map to deal with unpaid accounts? Keeping in mind the Statute of Limitations, over extended debts can be curtailed. Being judicious about bad debt indicates a conscientious plan of action.
How can your company recoup bad debt? Engaging experts who are familiar with the SOL is the first step on the path. Hiring a collection agency or debt collector can save you time, get the debt paid and keep you out of the picture with the client. 

A collection agency will go to bat for you, freeing up your time to continue with the daily business of running your company. A collection agency, often referred to as third party agency, accepts the job of pursuing the money owed to you. 

There are a variety of reasons people don’t pay their bills, including hardships from loss of jobs, illnesses or accidents. A collection agency or debt collector understands the numerous reasons for failure to pay and handles each case with dignity. 

Think about the cost of uncollected bad debt and a collection agency may be your best option for recouping that money. A collection agency or debt collector follows the letter of the law in working towards getting your money. Hiring an agency could increase your bad debt collection threefold. You might consider it as an investment for your company.