How The Debt Collection Statute of Limitations Affects Collecting DebtThe debt collection statute of limitations refers to the window of time that collection agencies can continue to legally pursue delinquent, unpaid debts. This basically means that unpaid debts have an expiration date, after which collection agencies have to stop with their collections activities. The period of time that may elapse for collecting a debt differs from state to state, but it shouldnt be confused with the credit reporting time limit. These are distinctly separate and different issues. Debt Recovery Statute Of Limitations Time Period Keep in mind that the debt collection statute of limitations time period commences from the date of the last reported activity on the account. This date is shown on your credit report. This is a completely different date from the date the account became overdue. Account activity can include making a payment, entering a payment arrangement or agreement, and even promising to make a payment. For example, should a customer elect to make a partial payment, this can effectively reset the time frame back to zero on the day payment is made. Debtors who intend to avoid paying their bills altogether may avoid making any contact whatsoever. These delinquent customers know that by letting the debt collection statute of limitations clock run out, then the window of opportunity for collecting the debt has passed. How Can The Debt Collection Statute Of Limitations Assist Business Owners? When business owners understand how the debt collection statute of limitations works, they can start to use these rules to their advantage and help in their debt collection strategies. Knowing that by encouraging past due customers to enter into payment arrangements and/or make partial payments can restart the statute of limitations time clock over again can be a tool to increase the amount of time you have to collect past due debts. This can prove to be a catalyst for business owners to take action and rethink their delinquent accounts. When it is known that you have a limited time period to collect unpaid debts, you may review and reconsider your debt collection strategies. You might even opt to hire an outside collection agency to help with recouping your debts sooner rather than later. What Is Covered Under The Debt Collection Statute Of Limitations? Excluded debts not covered under the debt collection statute of limitations include federal and state income taxes, child support, and federal student loans. Regardless of the amount of time that has passed, there is no expiration date to prevent collecting these types of accounts. Most other types of unsecured credit contracts are covered. If you have any concerns or doubts about how the debt collection statute of limitations might impact your own debt collection efforts, then you might contact a collection agency, or an attorney, that can help you understand your rights. About The Author
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