California is an expensive place to live and do business, so it is no surprise that debt and credit are a part of life. Those trying to collect debt have various legal options to be compensated. Whatever that approach is, it is essential to remember that creditors are barred from suing on unpaid written contractual debts that are four years old or older. Verbal agreements are limited to two years. Once the statute of limitation expires, the creditor cannot pursue litigation, arbitration or other legal proceedings.
The clock usually starts ticking on the statute of limitations on the date of the first missed payment. However, specific actions can restart the clock during the four-year window or after the statute of limitations expires. For example, the clock stops ticking if the debtor starts paying the debt. If the debtor resumes payments and then stops again, the four-year clock starts over again at the point where they stopped paying for the second time.
The creditor can continue to pursue payment if their actions fall within the confines of applicable laws, but the debtor has no legal obligation to pay. Unfortunately, these toothless pleas to honor the debt usually fall on deaf ears.
Four years is not a long time
It can seem far off in the distance, but businesses that need to collect money owed should be proactive while the law is on their side. It is essential to start the process with an experienced collections attorney who can weigh various legal options to determine the fastest and most efficient approach for recouping money owed to their client.