Texas Commercial Debt Collection Laws: Statute of Limitations & Exemptions

Key Takeaways

• Texas imposes a four-year statute of limitations on most commercial debts, meaning businesses must file lawsuits within four years of when the debt became due or risk losing legal enforcement rights.
• Commercial debt collection differs significantly from consumer collections, involving complexities like disputed invoices, freight charges, and B2B payment terms that require specialized handling.
• Texas law provides exemptions that protect certain business assets from seizure, including equipment essential for operations, making it critical to understand what can and cannot be pursued in collections.
• Acting quickly on overdue accounts is essential. Delaying collection efforts not only risks hitting the statute of limitations but also decreases recovery likelihood as debts age.
• Southwest Recovery Services combines 20+ years of commercial collection expertise with AI-guided tracking and contingency-only pricing, helping businesses recover debts while preserving valuable B2B relationships.

Commercial Debt Collection in Texas

When you extend credit terms to another business, whether Net 30, Net 60, or custom arrangements, you are providing an interest-free loan. This is standard in B2B transactions, but it introduces risk. When invoices go unpaid, you’re losing the working capital that keeps operations running.

Commercial debt collection in Texas operates under different rules than consumer debt collection. If you’re a trucking company chasing unpaid freight invoices, a wholesale distributor dealing with a retailer who hasn’t paid for inventory, or a contractor pursuing payment for completed work, you’re in the commercial debt space. These are business-to-business obligations that often involve complex disputes.

Common commercial disputes include disagreements over quantities received, damage claims, sales tax calculations, or whether services met specifications. Unlike consumer debts, where amounts are straightforward, commercial collections often require negotiation and documentation review before establishing the undisputed balance. Every day an invoice sits unpaid is another day your cash flow suffers, and the longer you wait, the harder recovery becomes.

The Four-Year Statute of Limitations Clock

Texas law establishes a four-year statute of limitations for most commercial debts, including unpaid invoices, business loans, open accounts, and contracts for goods or services. That clock typically starts from the date the debt became due, when your payment terms expired, or when the debtor made their last payment.

If you invoiced a customer on January 1, 2021, with Net 30 terms, that debt became due January 31, 2021. Your four-year window to file a lawsuit expires January 31, 2025. After that, the debt becomes “time-barred.” While it doesn’t disappear, you lose the ability to pursue legal action through the courts.

You can still contact the debtor, send invoices, and negotiate payment, but you cannot sue them or threaten legal action for time-barred debts. The debtor can still pay voluntarily, even after the statute expires.

Important Exceptions to Restart the Clock

If your debtor makes a partial payment, that can reset the statute of limitations, giving you another four years from that payment date. Similarly, if the debtor acknowledges the debt in writing and agrees to pay, this can restart the limitations period.

Managing dozens or hundreds of outstanding invoices makes tracking particularly challenging. Without systematic monitoring, smaller debts can slip past the four-year mark before you realize legal action is no longer an option. This is why many Texas businesses partner with professional collection agencies well before hitting that deadline.

Exemptions & What You Can Actually Collect

Texas provides exemptions designed to prevent businesses from being destroyed by collection efforts, though these protections don’t apply uniformly.

Certain business property used for daily operations may receive protection under Texas exemption laws, including tools of the trade, equipment essential for services, or inventory needed to continue operations. The reasoning is straightforward: if a business loses all operational capacity to satisfy one debt, it loses the ability to generate revenue to pay any creditors.

However, commercial exemptions are more limited than personal exemptions. Business bank accounts, accounts receivable, non-exempt equipment, vehicles not essential to operations, and real property can typically be targeted. Professional collection agencies evaluate each account with a clear understanding of Texas exemption laws. They focus on assets that can legally and practically be pursued, avoiding wasted time on protected assets.

Why Timing & Professional Help Matter

The Cost of Delay

Commercial debt recovery success rates decline dramatically as debts age. Invoices that are within 30 to 90 days old may see significantly higher recovery rates than debts outstanding for six months or a year. Over time, businesses close, financial situations worsen, and documentation gets lost, making collection more difficult.

The Internal Collections Trap

Many Texas businesses handle collections internally for too long. Your accounting team sends reminder emails, your sales staff makes awkward phone calls, and months slip by while cash flow suffers. By the time you hire a professional collection agency, valuable time is lost, and the debt has aged considerably.

Professional Agency Advantages

Professional collection agencies bring advantages that internal efforts can’t match. When customers receive correspondence from a third-party agency, it signals escalation without burning bridges through your direct relationships. Agencies have specialized negotiation strategies, understanding which payment plans work and which debtors need firmer approaches.

The contingency-based model used by agencies like Southwest Recovery Services eliminates upfront risk. You pay nothing unless the agency successfully recovers funds, typically 15% to 40% of collected amounts, depending on the debt’s age and complexity. There’s no financial risk in engaging professional help early when recovery prospects are strongest.

Why Choose Southwest Recovery Services for Your Commercial Collections

For over 20 years, we have specialized exclusively in B2B commercial debt collection, with deep expertise in the Texas market and industries that drive it. If you’re in trucking, logistics, construction, oil and gas, or wholesale distribution, we’ve built our reputation serving you.

We combine technology-driven efficiency with relationship-preserving professionalism. Our AI-guided tracking systems monitor every account across all communication channels (e.g., phone, email, text, and mail), ensuring no opportunity for resolution slips through. The daily involvement of our founder means your accounts receive strategic attention, not just automated processing.

Operating strictly on a contingency basis means zero upfront costs or monthly fees. You pay only when we successfully recover your funds, aligning our incentives completely with your success. This makes professional collection services accessible for businesses of all sizes, whether pursuing a $500 invoice or a $50,000 account.

We serve commercial businesses in the $10 million to $100 million revenue range, understanding the unique challenges mid-market companies face. Our 12 offices across six states provide geographic coverage for nationwide collections while maintaining personalized service and industry expertise.

Our approach prioritizes relationship preservation because today’s delinquent accounts might be tomorrow’s strong customers once cash flow improves. Our collectors use respectful, professional communication that recovers funds while actually strengthening business relationships by helping struggling customers work through temporary financial challenges.

Contact Southwest Recovery Services Now

Frequently Asked Questions (FAQs)

What happens if I wait too long & my commercial debt becomes time-barred in Texas?

Once the four-year statute of limitations expires, you lose the legal right to sue for the debt, but the debt itself does not disappear. You can still contact the debtor and attempt to collect through negotiation, and the debtor can choose to pay voluntarily. 

However, you cannot threaten legal action or file a lawsuit. The debtor can also use the expired statute of limitations as a defense if you attempt to sue. This is why proactive collection efforts within the first year or two of delinquency are so important.

How do commercial debt collections differ from consumer debt collections in Texas?

Commercial debt collection involves money owed between businesses, while consumer debt involves money owed by individuals for personal purposes. Commercial debts often involve more complex disputes such as disagreements over product quality, freight charges, quantities received, or contract terms.

Commercial collections require understanding business payment cycles, industry norms, and B2B relationship quirks that don’t exist in consumer collections.

Can a Texas business file for bankruptcy to avoid paying commercial debts?

Yes, businesses can file for bankruptcy protection, which creates an automatic stay preventing most collection actions. Chapter 7 bankruptcy involves liquidating business assets to pay creditors, while Chapter 11 allows businesses to reorganize and continue operations while developing a repayment plan. 

If your debtor files for bankruptcy, you must stop collection efforts immediately and file a proof of claim with the bankruptcy court. This is another reason why early collection efforts matter.

What documentation should Texas businesses maintain for commercial debt collection?

Maintain copies of all contracts or purchase orders, invoices with clear payment terms, delivery receipts or proof of service completion, all correspondence with the debtor, payment history showing any partial payments, and any agreements to modified payment terms.

Why should Texas businesses choose Southwest Recovery Services for commercial debt collection?

Southwest Recovery Services brings over 20 years of specialized commercial debt collection expertise. We operate exclusively on a contingency basis, meaning you pay nothing up front and only pay fees when we successfully recover your funds. 

Our AI-guided tracking technology, combined with experienced collectors, ensures persistent, professional contact across phone, email, text, and mail without damaging your business relationships. 

With 12 offices across six states and daily founder involvement, we provide both geographic coverage and personalized attention that helps you recover funds while maintaining customer goodwill.