Statute of Limitations, and Its Effects on Commercial Collection Agencies

In the complex landscape of debt collection, time is a key element that is directly proportional to recovery rates. The sooner a debt collection agency takes action on delinquent accounts, the higher the chances of successful recoveries, and vice versa!

Why? Because there’s a thing called the Statute of Limitations, that sets a definite legal deadline upon debt collection. And that’s the prime reason why a commercial debt collection agency prefers taking prompt actions on delinquent accounts. This has a two-way benefit. On one hand, they have enough time to recover the outstanding debts, and on the other hand, they also have the scope to pursue legal action and maximize their chances of recovery.

Let’s explore this blog till the end to learn in detail about the Statute of Limitations, and how it affects commercial collection agencies.

A Brief Overview of Statute of Limitations

The Statute of Limitations is a legal regulation, that announces the maximum period within which the parties who are involved in a debt collection, can initiate a legal proceedings for higher chances of recovery.

A statute of limitation varies on a state-wide basis. According to it, the time limit for a collection agency in Houston to collect overdue payments begins from the moment the debtor party makes a payment or misses one! After the time limit expires, no agency can legally sue the debtor party for delinquency.

However, that doesn’t mean that the debt gets called off! Rather, the creditor/ the collection agency won’t be able to file a legal complaint for that matter.

Here’s a guide to help you learn everything there is to the process of debt collection.

How Does it Affect Commercial Collection Agencies?

  • It Compels Agencies to Prioritize Collection Efforts

For debt recovery services in Houston to successfully retrieve overdue from debtor parties, they must prioritize collection efforts within the applicable statute of limitations! Missing out on this might result in the debt becoming legally uncollectible. Hence, the regulation kind of compels the collection agencies to hasten their collection efforts accordingly.

  • It Poses An Influence On Various Collection Strategies

The statute of limitations isn’t just responsible for setting legal deadlines for debt recovery. Rather, it also has an influence on the collection strategies that these agencies employ for successful debt collection. How? Well, when the deadline approaches, agencies are often seen to intensify their collection efforts. Either they choose to settle the matter with the debtor party or file a litigation for the matter.

  • It Requires Collection Agencies to Stay Well-versed in State-wide Laws

As mentioned before, the statute of limitations varies from state to state. Not just that, but it also varies on the basis of the type of debt as well! Now, collection companies in Texas have to operate across multiple states. So, to be compliant with the statutes, they have to be well-versed in the specific laws of different jurisdictions.

To Conclude

Statute of Limitations is a crucial element, that not just sets the deadline for debt collection, but also highly influences the operations and strategies of debt recovery agencies. Hence, it’s very much necessary for the best collection agency for small business to understand and adhere to the statutes to make sure that they stick to ethical and effective collection practices for hassle-free and successful recoveries.

Are you looking for a reputed collection agency to help you with your accounts receivables?

End your quest and visit us at Nelson Cooper & Ortiz, LLC today! Email at info@prelitigation.com for any further queries.

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