In commercial collections, where you do business can matter as much as how you do it.
Every U.S. state has its own rules governing notice periods, filing deadlines, interest charges, and recovery procedures.
Failing to follow them precisely can cost you your leverage — or even your legal right to collect.
In this guide, Paul Boyce, a commercial collections expert with over 30 years of experience, explains why understanding state-specific laws is essential for timely, compliant, and successful recoveries.
Why State Law Matters in Collections
Commercial debt recovery isn’t governed by one national rulebook.
Each state controls its own statutes for:
- Filing liens or lawsuits.
- Interest and fee limitations.
- Notice and demand requirements.
- Time limits (statutes of limitation).
- Licensing rules for third-party agencies and attorneys.
Ignoring these variations can invalidate claims or expose businesses to counterclaims.
“Collections are won or lost on compliance.
Knowing the rules of the jurisdiction is just as important as knowing the balance due.”
Examples of Key State Differences
| Legal Area | Variations by State |
|---|---|
| Statute of Limitations | Ranges from 3 to 10 years depending on contract type. |
| Interest Rate Limits | Some states cap late fees or interest charges; others allow free-market rates. |
| Lien and Bond Rights | Construction-related claims differ widely by state filing timelines. |
| Agency Licensing | Certain states require both in-state and out-of-state agencies to hold licenses. |
| Attorney Collection Rules | States set unique procedural notice and venue requirements. |
Even simple missteps — like filing in the wrong venue or sending an improper notice — can erase your advantage.
How to Stay Compliant Across States
Step 1 – Verify the Governing Law Clause
Check your contracts or credit applications to see which state’s law applies.
If none is listed, the debtor’s location often dictates the venue.
Step 2 – Use State-Specific Demand Language
Tailor demand letters and notices to meet that state’s legal expectations.
Documentation Mistakes That Cost You Collections
Step 3 – Track Filing Deadlines
Missing a statutory deadline — even by one day — can forfeit lien or legal rights.
Step 4 – Partner With Licensed Professionals
When escalation is necessary, ensure your collection agency or attorney is licensed and experienced in that state.
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Step 5 – Keep a Compliance Checklist
Maintain a simple table of key states where you do business with their statutes of limitation, interest limits, and licensing rules.
Expert Insight from Paul Boyce
“I’ve seen companies lose solid claims because they sent the wrong notice or filed in the wrong venue.
Knowledge of state law isn’t optional — it’s part of professional credit management.”
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Key Takeaways
- Each state has unique statutes that affect collection timing and procedure.
- Always verify governing law and venue before pursuing payment.
- Work only with licensed, compliant collection agencies and attorneys.
- Proper documentation ensures your claim stands up across jurisdictions.
Need Clarity Before You Escalate?
Get a confidential review with Paul Boyce, Commercial Collections Expert.
If your account involves multi-state issues, I can connect you with a licensed commercial collection agency that handles these matters ethically and effectively.