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When businesses in Ohio need help recovering unpaid debts, they often turn to debt collection agencies. These agencies, acting as intermediaries, work to recover funds while adhering to both federal and state laws. Here’s what you need to know:
Ohio’s debt recovery landscape balances creditor rights and consumer protections, making compliance and agency selection critical for success.
Ohio Debt Collection Statute of Limitations by Debt Type
Ohio's debt collection landscape operates under a blend of federal and state laws. These regulations are critical for creditors and collection agencies, as non-compliance can result in lawsuits, hefty fines, and reputational harm.
The FDCPA is the cornerstone of federal law governing debt collection across the U.S., including Ohio. It applies to third-party debt collectors and debt buyers but generally excludes original creditors unless they use a different name when collecting debts. The Act covers personal, family, or household debts but excludes business or commercial obligations.
Under the FDCPA, debt collectors must follow strict communication guidelines. For instance, they can only contact consumers between 8 a.m. and 9 p.m. local time. Calls to a consumer's workplace are prohibited if the employer forbids them or if the consumer is represented by an attorney. Additionally, sending debt-related communications via postcard is not allowed.
Collectors are required to send a written validation notice within five days of the first contact. This notice must outline the debt amount, the creditor's name, and the consumer's 30-day right to dispute the debt. If a consumer disputes the debt or requests communication to stop in writing, the collector must comply, except to notify the consumer about specific legal actions or the termination of collection efforts.
"It is the purpose of this subchapter to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses."
– Federal Trade Commission
Violating the FDCPA can lead to substantial financial penalties, and consumers have one year from the date of the violation to file a lawsuit. While the FDCPA sets the federal baseline, Ohio's OCSPA offers additional protections.
The OCSPA complements the FDCPA by offering state-level protections. Unlike the FDCPA, which applies primarily to third-party collectors, the OCSPA also covers many original creditors, except for specific financial institutions like banks. This broader scope ensures more entities are held accountable under Ohio law.
The OCSPA prohibits unfair or deceptive practices during consumer transactions. Violators can face lawsuits in Ohio civil courts for actual damages and up to $5,000 in noneconomic damages if claims are filed within one year. The Ohio Attorney General's office enforces these rules and handles consumer complaints.
Consumers should exercise caution when making partial payments or acknowledging old debts, as these actions can restart the statute of limitations clock.
Ohio law also defines specific timeframes for legal debt recovery. The statute of limitations sets a deadline for creditors or agencies to sue for unpaid debts. As of June 14, 2021, most consumer and commercial debts - such as credit cards, written contracts, and oral agreements - are subject to a six-year statute of limitations. This marks a reduction from earlier periods.
However, not all debts follow the six-year rule. For example, medical debts and contracts of sale, including car loans, have a four-year statute of limitations. The clock typically starts 30 days after the default date or the last payment, whichever comes later.
| Debt Type | Statute of Limitations | Relevant Ohio Statute |
|---|---|---|
| Written Contracts | 6 years | Ohio Rev. Code § 2305.06 |
| Oral Contracts | 6 years | Ohio Rev. Code § 2305.07 |
| Open Accounts (Credit Cards) | 6 years | Ohio Rev. Code §§ 2305.06/2305.07 |
| Promissory Notes | 6 years | Ohio Rev. Code § 1303.16 |
| Medical Debt | 4 years | Ohio Case Law / OCSPA |
| Contracts of Sale (Car Loans) | 4 years | Ohio Rev. Code § 1302.98 |
| Judgments | 5 years (Renewable) | Ohio Rev. Code § 2329.07 |
| Mortgage Deficiency | 2 years | Ohio Rev. Code § 2329.08 |
When a debt becomes "time-barred" - meaning the statute of limitations has expired - creditors and agencies can no longer sue or threaten legal action to recover the debt. However, the debt itself doesn't vanish. Agencies can still request voluntary payment but must clearly disclose that the debt is time-barred and cannot be enforced in court.
"This doesn't mean your debt disappears after that, but it means a debt collector can't take legal action against you more than six years after the debt became overdue or a payment was last made."
– Jeremiah Heck, Founding Partner, Luftman, Heck & Associates
The Federal Trade Commission reported over 140,000 debt collection complaints in Q2 2025, many of which involved attempts to collect time-barred debts. In one case, the FTC and the Department of Justice secured a $2.5 million settlement with Asset Acceptance, LLC for pursuing expired debts, misrepresenting legal obligations, and failing to disclose when debts were unenforceable.
For efficient management, agencies should categorize accounts as "in-statute", "nearing-expiration", or "time-barred." Tracking charge-off dates, last payments, and default dates at intake is essential to ensure compliance and minimize regulatory risks.
Ohio stands out by not requiring collection agencies to obtain a specific license, pay registration fees, or post bonds to operate. The state defines a "collection agency" as anyone who, for compensation, provides services to collect debts owed to others. However, certain entities are exempt from this definition, including banks, trust companies, credit unions, real estate brokers, retail sellers collecting their own debts, and insurance companies authorized in Ohio.
"Ohio debt collectors do not need to be licensed to operate in the state. However, bill collectors still have to comply with the FDCPA, the Fair Credit Reporting Act and state laws such as Ohio's Consumer Sales Practices Act."
– Jeremiah Heck, Founding Partner, Luftman, Heck & Associates
First-party collection agencies generally face fewer requirements compared to third-party agencies. Third-party collectors must maintain professional standards, such as keeping separate trust accounts for creditors' funds. Additionally, commercial collection agencies seeking membership in the Commercial Collection Agency Association (CCAA) are required to post a surety bond of at least $300,000 to protect creditors.
Ohio law also has specific rules for lawsuits involving assigned debts. According to Ohio Revised Code § 1319.12, these cases require an Ohio-admitted attorney, a voluntary written debt assignment, and must be filed in the debtor's county. These regulations help creditors work with agencies that operate ethically and manage debt portfolios responsibly. Agencies must also follow strict collection practices to avoid running afoul of legal standards.
Ohio law, alongside the FDCPA and the Ohio Consumer Sales Practices Act (OCSPA), sets clear boundaries on acceptable collection practices. Violations can lead to lawsuits, enforcement actions, and financial penalties.
Some prohibited practices include:
Consumers have the right to sue for violations within one year of the incident and may recover damages and attorney fees. Enforcement is handled by the Ohio Attorney General's Office and federal agencies like the Federal Trade Commission.
If a debtor submits a written request to stop communication, collection agencies must comply immediately, though they can still pursue legal action if necessary. Additionally, if a debtor disputes a debt within the 30-day validation period, all collection activity must pause until the agency provides proper verification.
Ohio collection agencies use several techniques to recover debts, all while adhering to state and federal regulations. Phone calls and mail are the most common methods, often used to arrange payment plans. Agencies must follow strict contact limits to avoid overwhelming debtors, as required by law.
Another tool is skip tracing, which helps locate individuals by updating their contact information. Under Ohio law, agencies can reach out to third parties during this process, but they are prohibited from revealing the existence of the debt. This is especially useful when debtors are unresponsive or actively avoiding payment.
Legal enforcement is a more assertive option. Governed by Ohio Revised Code § 1319.12, this process requires the involvement of attorneys. Ohio allows a 10% legal interest rate on debts and judgments. The statute of limitations for most consumer debts is six years, but written contracts can extend this period to 15 years.
Agencies are also required to provide debt validation as part of their recovery efforts. Within five days of first contact, they must send a written notice outlining the debt amount and the debtor's right to dispute it. Many agencies in Ohio operate on a contingency basis, meaning they only charge a percentage of the funds they recover.
These methods highlight how collection strategies are tailored to meet legal requirements and achieve effective results.
The choice between first-party and third-party collection services significantly impacts the approach to debt recovery. Each type operates under distinct strategies and legal frameworks.
First-party collections are handled by the original creditor or a partner acting under the creditor's name. These efforts focus on early-stage recovery, typically targeting accounts 30 to 60 days past due. The goal is to preserve customer relationships and prevent debts from escalating. While first-party collectors are generally not bound by the FDCPA, they must comply with the Ohio Consumer Sales Practices Act.
"First-party agencies are subsidiaries or affiliates of the original creditor... these agencies typically do better at maintaining the customer relationship." – LHA Ohio Debt Help
Third-party collections, on the other hand, involve independent agencies or debt buyers working under their own name. These agencies are usually brought in for accounts that are 90 days or more past due, when the relationship between the creditor and debtor has often deteriorated. Unlike first-party collectors, third-party agencies must strictly follow both FDCPA and Ohio state regulations. For example, Commercial Collectors Inc., based in Ohio, offers both white-labeled first-party services and third-party recovery for overdue invoices on a contingency basis.
The communication styles differ as well. First-party collectors tend to use softer, more customer-friendly methods like courtesy calls and reminders to maintain the brand's reputation. In contrast, third-party agencies adopt a more formal and persistent approach. This can include skip tracing, demand letters, and, if necessary, litigation. Mesa Revenue Partners, another Ohio-based agency specializing in B2B collections, employs advanced tactics like asset investigation and commercial litigation when standard methods prove ineffective.
Choosing the right type of collection service is essential for managing debt portfolios effectively in Ohio. Each approach offers unique advantages depending on the stage of delinquency and the desired outcome.
Choosing the right debt collection agency in Ohio requires careful attention to compliance, especially since the state doesn’t mandate agencies to hold a license or post a bond. This means businesses need to go the extra mile to ensure their chosen agency adheres to both federal and state regulations.
Start by confirming the agency’s litigation practices. Make sure they use attorneys admitted to practice in Ohio and that any legal actions are filed in the county where the debtor resides.
Next, review sample assignment agreements. Ohio law requires a separate, voluntary written agreement - distinct from the initial listing document - if an agency plans to sue in its own name. This agreement should clearly authorize the referral to an Ohio-licensed attorney and include an effective date.
For commercial debt collection, check if the agency is CCAA-certified. This certification ensures the agency meets higher standards, such as maintaining a $300,000 surety bond, using separate trust accounts, and participating in ongoing education. These safeguards provide additional protection beyond what Ohio law requires.
Also, confirm the agency’s understanding of Ohio’s debt timelines and legal interest rates. Ensure they have processes in place to avoid common violations, like exceeding the 7-in-7 call rule (no more than seven calls within seven consecutive days). Agencies with A+ ratings from the Better Business Bureau are often a good bet - examples include Phoenix Financial Solutions in Shelby, Recovery One in Columbus, and Capital Recovery Systems in Dublin.
Thorough compliance checks are critical for protecting your business in Ohio’s competitive debt trading market. Once you’ve verified compliance, tools like Debexpert can further streamline your debt portfolio management.
Debexpert simplifies managing debt portfolios in Ohio with tools tailored for the debt trading market. Its portfolio analytics help businesses evaluate which debts are better suited for collection versus sale. This is especially useful in Ohio, where statutes of limitations differ - for example, four years for open accounts and 15 years for written contracts. Real-time data ensures informed decisions about whether aging accounts should be assigned to a collection agency or sold to a debt buyer.
The platform also provides secure file sharing with end-to-end encryption, safeguarding sensitive debtor information during transfers. Real-time chat features allow direct communication with potential collection partners, making it easier to confirm their expertise in Ohio-specific regulations.
For businesses handling multiple portfolios, Debexpert’s notification system is a game-changer. It alerts users when buyers or collection agencies specializing in Ohio debt become active on the platform, saving time compared to manually vetting each agency. With mobile and desktop access, portfolio managers can track collection activities and seize opportunities from anywhere.
When managing debt portfolios in Ohio, selecting the right type of agency can make all the difference. First-party agencies are ideal for maintaining positive relationships, such as with alumni or future clients, as they often use "student-first mediation" or more diplomatic methods to resolve debts. On the other hand, third-party agencies focus on quicker debt recovery, often employing more assertive tactics.
For commercial debts, Ohio offers tools like Cognovit Notes, which allow judgments to be issued within 24 hours if conditions are met. For instance, NexaCollect successfully recovered $55,000 using a Confession of Judgment. However, it’s crucial to note that this approach is strictly prohibited for consumer debts, making it essential to differentiate between business-to-business (B2B) and business-to-consumer (B2C) portfolios.
Timing also plays a critical role in debt recovery in Ohio. Written contracts have a 6-year statute of limitations, while open accounts are limited to 4 years. A noteworthy example involves Cincinnati Pediatric Dental Group, which faced $90,000 in unpaid orthodontic overages that were 4.5 years old. NexaCollect identified the debts as time-barred under Senate Bill 13 and instead launched a "Credit Reporting Amnesty" campaign. This strategy led to the recovery of $38,000 from parents eager to clear their credit for mortgage applications.
Healthcare debt managers in Ohio must also navigate specific requirements, such as screening for Hospital Care Assurance Program (HCAP) eligibility. This is particularly important given that 41% of Ohio adults carry healthcare debt. By combining these tailored strategies with modern technology, agencies can significantly improve recovery outcomes.
In addition to choosing the right agency, leveraging advanced technology tools can streamline the recovery process and ensure compliance with Ohio’s strict regulations. These tools are especially valuable for adhering to legal communication limits and managing statute timelines.
Ohio agencies frequently rely on automated workflow engines to monitor payment plans, send timely follow-ups, and escalate accounts as needed. Multichannel communication options - like email, SMS, and self-service portals - help accelerate the recovery process.
An essential part of managing debt in Ohio is conducting "Date of Service" audits to differentiate between written contracts (6-year statute) and open accounts (4-year statute), as outlined in Senate Bill 13. Properly drafted intake forms play a pivotal role here:
"If your intake forms aren't perfectly drafted 'written contracts,' your right to sue now expires in just 4 years - not 6" – NexaCollect
Additional tools such as skip tracing, automated litigation checks, and bankruptcy scrubs help locate debtors and assess legal risks. Compliance software ensures adherence to the "7-in-7 rule". This is especially important given that the FTC has found up to 79% of collection practices violate federal standards during some reviews. Automated compliance monitoring shields both agencies and creditors from potential infractions.
Cloud-based platforms further enhance portfolio management by offering real-time updates and secure, role-based access. These technologies, when combined with strategic agency selection, create a robust framework for efficient and compliant debt recovery in Ohio.
To navigate Ohio's debt collection landscape, it's essential to pair federal FDCPA guidelines with Ohio's OCSPA standards. The OCSPA extends its reach to both original creditors and third-party collectors, offering broad protections for consumers.
Ohio's statute of limitations sets a six-year window for consumer debt collection and a four-year limit for open accounts. These timelines highlight the importance of selecting agencies with a firm grasp of legal requirements.
When choosing a collection agency, look for those with robust compliance systems. This includes adherence to the 7-in-7 call limit and collaborations with Ohio-admitted attorneys for litigation purposes. While Ohio doesn't mandate state-specific licensing for collection agencies, verifying these qualifications is crucial for effective and lawful debt recovery.
Technology has become a cornerstone of modern debt collection. Tools like automated compliance monitoring, statute tracking, and multichannel communication systems help agencies stay within legal boundaries while optimizing recovery rates. The best agencies strike a balance - achieving strong collection results while preserving relationships and protecting reputations.
To ensure compliance, verify that the agency adheres to Ohio Revised Code Sections 1319.12 and 1319.16, which outline rules for collection practices, even for agencies without a state license. Additionally, you can check the Ohio Department of Commerce's Consumer Finance Licensee Lookup to confirm if the agency has a valid license or meets the necessary state requirements.
If you're approached about a time-barred debt in Ohio, it's important to understand your rights. Collectors are not allowed to sue you or threaten legal action for debts that are beyond the statute of limitations, which is usually 4 to 6 years, depending on the type of debt.
You have a few options in this situation:
Understanding these steps can protect you from unfair practices and help you make informed decisions.
In Ohio, first-party collections involve the original creditor handling the debt directly. This approach typically comes with fewer legal restrictions, making it a more straightforward option for creditors. On the other hand, third-party collections involve outsourcing overdue accounts to independent agencies. These agencies must adhere to Ohio state laws and the federal Fair Debt Collection Practices Act (FDCPA).
When choosing between these two methods, think about factors like how old the debt is, the nature of the debt, the relationship between the creditor and debtor, and any licensing or legal requirements that might apply. Each option has its own set of considerations, so it's important to weigh them carefully.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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