Companies that extend credit to individuals and those that offer billing after service have been performed will often wonder how they can collect on those debts. While many people who utilize credit to pay for things will take care of those bills, there are some cases in which companies will have to fight for what they’re due.
California laws set specific standards for debt collections. One thing that you have to be careful of when you’re trying to get the money is that you haven’t let too much time pass. There’s a statute of limitations for debt collection.
How long do you have to collect debts?
Typically, you have four years to collect debts based on written contracts in California. Once that time passes, you generally won’t be able to take a person or company to court to try to collect. There are some exceptions to this because certain actions may restart the clock for the statute of limitations. A person who makes a partial payment or one who acknowledges the debt in writing will restart the clock for the statue of limitations.
Another point to remember is that the statute of limitations only applies to filing a lawsuit. Debt collectors can still try to recover the money through other collection measures, such as phone calls or mailed bills. They can also report the account to credit reporting agencies.
Any company that’s collecting debts should ensure they understand the applicable laws. It’s imperative that they only act within the confines of the law. Making errors, including waiting too long to collect on debts, could mean that they’re unable to get the money they’re due.