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How Long Does My Company Have To Collect A Debt Owed?




The answer to this question largely depends on whether the debt came from an open account or a contract.  

 

An “open account” (a/k/a a “customer account”) is an account used for “running or concurrent dealings between the parties which has not been closed, settled, or stated, and in which the inclusions of further dealings between the parties is contemplated.  Heron v. Gaylor, 46 N.M. 230, 232, 126 P.2d 295, 297 (N.M. 1942).  The parties agree upon a “series” of reciprocal charges and allowances leading to a single liability paid all at once.  Id.  According to N.M.S.A. § 37-1-4, collection on these accounts must occur within four years.  

 

However, when the liability in question arose under a valid contract, the party looking to enforce the agreement has six years per NMSA 1978, § 37-1-3.  

 

The term broadly applied in situations like these is "statute of limitations."  In the above circumstances, the statute of limitations created by non-payment of an obligation is four years when arising under an open account, and six years when arising under contract.  



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