What are the statutes of limitations for debt collection?
Preserving cash flow is essential for all companies, especially in times of crisis. Vigilance with regard to payment deadlines is more important than ever and is one of the biggest challenges for all companies this year. To maintain a healthy level of cash, it is essential to ensure that the process of recovering unpaid invoices does not exceed the limitation period, otherwise any legal action will be made difficult, if not impossible. What is the limitation period? What are the limitation rules for debt collection? What to do if the limitation period for debt has passed? We take stock in this article.
Preserving cash flow is essential for all companies, especially in times of crisis. Vigilance with regard to payment deadlines is more important than ever and is one of the biggest challenges for all companies this year. To maintain a healthy cash flow, it is essential to ensure that the process of recovering unpaid invoices does not exceed the limitation period , otherwise any legal recourse will be made difficult, if not impossible. What is the limitation period? What are the limitation rules for debt collection? What to do if the limitation period for debt has passed? We take stock in this article.
What is the statute of limitations for debt collection?
The limitation period for a debt corresponds to a period beyond which legal recovery such as the payment injunction procedure, for example, becomes inadmissible.
This limitation period starts the day after the due date mentioned on the invoice. As a general rule, this deadline is set at 30, 45 or 60 days after the issue of the invoice according to the legislation in force, depending on the creditor’s sector of activity.
Reminder: Definition of debt
The limitation period for claims changes depending on the nature of the debtor:
- If the debtor is a private individual, the creditor has 2 years. In the absence of a specific provision in the contract, the creditor therefore has these two years to try to obtain the recovery of his outstanding payments. (article L218-2 of the Consumer Code). This is known as civil prescription.
- If the debtor is a professional (commercial company, trader, professional, etc.), the limitation period is extended to 5 years (article L110-4 of the Commercial Code). However, shorter special requirements may exist, as in the naval sector, for the acquisition of supplies of materials, constructions and equipment for refueling a ship. In this case the time limit is reduced to 1 year.
Exceeding the limitation period for a claim: what solution?
When the prescription period is exceeded, only in the case of commercial claims (professional debtor), the creditor has the possibility of seizing the court by virtue ofarticle 2247 of the Civil Code”: “the judges cannot substitute ex officio the means resulting from the prescription”.
The creditor may then initiate legal collection proceedings against the debtor. Nevertheless, the latter can raise the statute of limitations of his debt with the judge to avoid a possible condemnation.
In the case of a civil claim (the debtor is an individual), this rule does not apply. The only possible recourse is to attempt an amicable recovery procedure .
But the older the debt, the lower the chances of success of a collection procedure. To be sure to put the best chances on your side to resolve your unpaid invoice problems, do not hesitate to contact a debt collection company which will put all its expertise at your service. It will be able to activate the most effective levers against your debtor while preserving your commercial relations.
To learn more and for any question about the statute of limitations in debt collection: contact us.
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