Statute of limitations

What does the statute of limitations mean in debt collection?

The statute of limitations describes the statutory period after which a claim can only be enforced in court if the debtor does not raise the defense of the statute of limitations. It serves to protect the debtor so that he no longer has to fear old claims after a certain period of time. For creditors, this means that although their claim still exists, it is no longer enforceable if the debtor raises the defense.

If the debtor raises the plea of limitation, the claim is rejected and the creditor must bear all the costs of the proceedings. In legal terms, this is referred to as a “pleaded” claim. This means that the claim is no longer enforceable until the debtor actively invokes it.

Without a timely interruption or suspension of the limitation period, the claim loses its enforceability. This makes it particularly important for creditors to keep an eye on deadlines and take action in good time. A time-barred claim can only be settled voluntarily by the debtor, which rarely happens in practice.

How long are the limitation periods for claims?

The length and start of the limitation period depend on the type of claim. In debt collection, the standard period is often three years, applying to invoices and contracts.

This period does not start immediately but begins at the end of the calendar year in which the claim arises, giving creditors additional time to enforce their rights.

Examples of limitation periods:

• 6 months: For claims for compensation by the landlord due to alteration or deterioration.

• 1 year: For utility bills for landlords.

• 3 years: For most claims such as invoices, services and deliveries.

• 30 years: For final judgments and generally titles.

Example: If an invoice was issued on May 10, 2021, the limitation period starts on December 31, 2021, and ends on December 31, 2024.

What happens when a claim becomes time-barred?

If a claim is time-barred, the creditor loses the opportunity to effectively enforce it in court. The debtor can refuse payment by invoking the statute of limitations.

For creditors, this means that even justified claims become practically worthless, as they can no longer be legally enforced if the statute of limitations is invoked. Although a reminder notice or a lawsuit is permissible, the debtor can raise the plea of limitation. Even an indication by the debtor that the claim is “very old” is generally regarded by the court as a plea of limitation.

While out-of-court collection efforts are still possible, payments will only occur if the debtor voluntarily agrees to pay the outstanding amount. In practice, this rarely happens, as debtors often rely on the statute of limitations to avoid payment.

Creditors must act promptly to enforce their claims before the statute of limitations expires. Professional support from a collection agency can help track deadlines and prevent financial losses.

How can the statute of limitations be stopped in debt collection?

The statute of limitations can be paused or reset through certain actions to maintain its enforceability. In debt collection, this is referred to as suspension or interruption of the statute of limitations. These mechanisms are crucial for creditors to secure their claims and prevent them from becoming time-barred.

Suspension of the statute of limitations
Suspension temporarily pauses the limitation period. Once the suspension ends, the remaining period continues to run.

Interruption of the statute of limitations
Interruption, on the other hand, resets the limitation period, starting it anew. Both mechanisms are effective tools to safeguard claims over the long term.

Common actions to stop the statute of limitations:

• Default summons: As soon as the default summons is served on the debtor, the limitation period is stopped. The new limitation period then results from the outcome of the proceedings. When an enforcement order becomes legally binding, the 30-year limitation period begins.

• Payment by the debtor: If the debtor makes a (partial) payment or acknowledges the claim, the limitation period begins anew in accordance with Section 212 BGB. This gives creditors the opportunity to gain additional time to enforce their claims.

• Court proceedings: If a lawsuit is filed, this initially suspends the limitation period and can be interrupted by a judgment or title. The period is reset once the proceedings have been concluded and starts all over again. This applies in particular if an enforcement order is obtained which triggers a new limitation period of 30 years.

Creditors should assess early which action is most suitable for their situation. Filing a payment order or initiating a lawsuit is particularly effective for preventing the statute of limitations from expiring.

Why is the statute of limitations important in debt collection?

The statute of limitations is critical in debt collection because once a claim becomes time-barred, it can no longer be legally enforced. For creditors, this often results in financial losses, as payment would rely solely on the debtor’s goodwill – a rare occurrence in practice.

Debt collection agencies carefully evaluate whether a claim is still enforceable. A professional collection agency ensures that deadlines are not missed. By taking timely actions like filing payment orders or lawsuits, creditors can secure their claims and prevent expiration. This keeps the claim active and minimizes financial risks.