5. Statute of Limitations on Debts

It’s essential for both creditors and debtors to be aware of the statute of limitations on debts. This limits the period within which creditors can legally sue to collect a debt. The statute of limitations varies by jurisdiction and the type of debt.

6. Protecting Creditors’ Rights in Business Transactions

For businesses, protecting creditors’ rights is critical for maintaining financial stability. Some effective strategies include:

a. Clear and Enforceable Contracts: Ensure that credit or loan contracts are well-drafted, specifying terms, interest rates, and collateral.

b. Monitoring Debtors’ Creditworthiness: Regularly assess the creditworthiness of potential debtors to reduce the risk of default.

c. Prompt Debt Recovery: Act swiftly to recover debts through professional debt collection practices.

d. Securing Collateral: When extending significant credit, secure collateral to have recourse in case of default.