Debt Collection Agency USA: A Creditor's Procedural Map

Commercial debt collection in the USA is governed by state law, not the FDCPA: the Fair Debt Collection Practices Act (15 U.S.C. § 1692) applies only to third-party collection of consumer debt — B2B receivables, trade payables, and commercial invoices sit entirely outside its scope. The relevant federal layer for commercial collection is the UCC (Article 2 for goods, Article 3 for negotiable instruments, Article 9 for security interests), the Bankruptcy Code (11 U.S.C.), and the Federal Arbitration Act + New York Convention for cross-border award enforcement. State licensing is the non-negotiable compliance variable: California requires a DFPI licence (SB 908, since 1 January 2022 — covering both consumer and commercial collectors); New York City requires a DCWP Debt Collection Agency Licence for five-borough activity; Texas requires a Finance Code Chapter 392 surety bond + Secretary of State registration; Florida has an OFR registration regime for consumer (lighter for pure commercial). Statutes of limitations vary sharply by state: New York = 6 years (CPLR § 213), California = 4 years (CCP § 337), Texas = 4 years (CPRC § 16.004), Florida = 5 years (§ 95.11(2)(b)), Delaware = 3 years. Federal diversity jurisdiction under 28 U.S.C. § 1332 provides a federal court route for foreign creditors when the amount in controversy exceeds USD 75,000 and one party is foreign — with full FRCP applying and a USD 405 filing fee. The Uniform Foreign-Country Money Judgments Recognition Act (adopted by most states) enables recognition of foreign court judgments without re-litigating the merits.

A German machine-tool manufacturer holds USD 420,000 outstanding from a Dallas-based distributor — equipment delivered under a signed supply contract, 90 days overdue. Three parallel options: (1) Texas-licensed collection partner: Finance Code Chapter 392 surety bond + Secretary of State registration required before first debtor contact; contingency rate for a fresh, well-documented USD 420,000 commercial invoice: 10–14%. (2) Federal diversity jurisdiction: file in the Northern District of Texas (Dallas Division). German manufacturer = foreign plaintiff; Texas distributor = US citizen; USD 420,000 exceeds USD 75,000 threshold — 28 U.S.C. § 1332(a)(2) diversity jurisdiction available. Filing fee: USD 405. Service on Texas domestic defendant under Rule 4 is straightforward. (3) Recognize any German judgment: UFCMJRA (adopted in Texas) enables recognition of a German Landgericht judgment — enforceable in Texas once recognised, subject to limited challenge grounds. Texas written contract limitation: 4 years under CPRC § 16.004. The single most expensive mistake: waiting 18 months assuming a 6-year limitation applies everywhere.

The US Legal Framework for Commercial Debt Collection

Commercial B2B collection sits outside the FDCPA. Relevant federal layer: UCC (Articles 2, 3, 9), Bankruptcy Code (Chapters 7, 11, 15), Federal Arbitration Act + New York Convention for foreign arbitral awards.

State Licensing: Who Can Actually Collect

California: DFPI licence (SB 908, 1 January 2022) — covers both consumer and commercial collectors. New York City: DCWP Debt Collection Agency Licence. Texas: Finance Code Chapter 392 surety bond + Secretary of State registration. Florida: OFR registration for consumer; lighter for commercial-only. Illinois, Washington, Massachusetts, Minnesota, Oregon, Maryland, North Carolina and a dozen further states have their own regimes. An agency licensed in one state cannot lawfully pursue a debtor in another without a local licence or licensed local counsel.

Statute of Limitations by State

California: 4 years (CCP § 337). New York: 6 years (CPLR § 213). Texas: 4 years (CPRC § 16.004). Florida: 5 years (§ 95.11(2)(b)). Delaware: 3 years. Ohio: 6 years. Pennsylvania: 4 years. Illinois: 10 years. Delaware is the shortest at 3 years — a common incorporation state where debtor assets are rarely physically present.

Court Structure

Federal district courts: diversity jurisdiction for foreign plaintiffs when amount exceeds USD 75,000 and parties are from different states or one is foreign (28 U.S.C. § 1332). Full FRCP; filing fee USD 405. State trial courts: California = Superior Court; New York = Supreme Court; Texas = District Courts; Florida = Circuit Courts. Small claims: USD 2,500 (Rhode Island) to USD 25,000 (Delaware).

Judgment Enforcement Tools

Writ of execution: sheriff seizes and sells non-exempt property. Bank levy: freezes and withdraws funds from accounts. Wage garnishment: employer withholds up to 25% of disposable earnings (federal CCPA cap; state rules may reduce further — Texas, Pennsylvania, North Carolina, South Carolina offer strong employee protections making wage garnishment a non-starter). Turnover order: common in Texas (§ 31.002) for intangibles and accounts receivable. Judgment lien: recorded against real property. Post-judgment discovery: compels asset disclosure. Texas unlimited homestead exemption effectively shields primary residence regardless of value.

How does commercial debt collection work in the USA?

Commercial B2B collection runs through state contract law, the UCC, and state civil procedure. Process: demand, skiptrace, negotiation, court filing if required, then judgment enforcement through writs, levies, and liens under the debtor’s state rules. Foreign creditors: three routes — federal diversity jurisdiction, licensed US collection partner, or UFCMJRA recognition of a foreign judgment.

You know the debt is real. What you need now is someone on the ground in the right jurisdiction who can make it cost the debtor more to ignore it than to pay it. Contact Cosmopolite for a free case assessment. No win, no fee.