Published Friday, February 10, 2023 by Alan Holdren

This question comes into play many times when evaluating a potential new client for costing purposes or if an agency will even consider the acceptance of some accounts for work.

The general rule of thumb most of the time with accounts is that the older they are the worse they are. This many times is correct and many times, it does not apply. Examples of each are out there. Medical accounts have Insurance filing dates that must be watched along with State regulations that can vary concerning the length of time an account is valid for 3rd party collection efforts. In Indiana, the general rule of thumb is that accounts with no signed contracts or verbal contracts are good for 6 years and written contracts are good for 10 years as are judgments from the date they are granted. In theory, an account could be valid for collection purposes for 20 years combining the written contract and the judgment times together with perfect timing. Many individuals will go ahead and get a judgment on a large balance account as to not allow it to expire. Good practice if you can afford it, but probably if you have not collected it by then it is actually dead, just no one wants to admit it.

There are in my opinion some accounts, like trees, need to be harvested when they are mature and ready to be processed. One example of this is rental property accounts in a University dominated community. Even though landlords are technically renting to adults, most will be unemployed, non-garnishable adults that will have the ability to pay 1 to 3 years if jobs are found right out of school and no one is heading into a masters degree. One thing that may change this decision is if an employed parent or guardian signs as a guarantor on the lease. This can change the game and make the account immediately viable for collection efforts. These accounts need to be matured until the approximate date of graduation to seek the best results in a cost effective manner for the agency. Student loans fall into this same category. Some commercial type accounts will fall into this same scenario based upon jobs being completed and the funds available based upon the times draws from the bank are being executed.

The basic answer to the posed question is that the earlier you can get in line the better for both creditors and collection teams unless there is a clear justifiable reason to stay out and conserve resources.