Debt Collection Tips

When the Account is Dead: 5 Sure Signs

Accounts Receivable  |  3 min read

As professional debt collectors, we’re pre-programmed with a deeply engrained “Never Say Die” philosophy. Tenacity and optimism are defining characteristics of successful agents.

But there comes a point when you’re trying to squeeze blood from a stone: when the debtor account is beyond recovery and no amount of skill, effort or good looks is going to bring it back. When the account has flatlined.

Here are 5 unmistakable signs that an account has crossed into no-man’s land:

1. The business has ceased to operate.

With business debt, especially in the case of an incorporated company, if the organization is shuttered, you’re usually out of luck. Unless you have a personal guarantee from the owner (which is very seldom the case), you have no recourse. Chances are, you’ve ignored some of the warning signs that a customer is in trouble. Waiting to be paid is always risky: use my debt recovery calculator to see the probable value of accounts owed to you—and get collecting.


2. The debt is statute barred.

Every Canadian province and territory has a statute of limitations on debt under provincial law. In half those jurisdictions, the limit is only two years (get all the details here). Once the limitation period has passed, you or your collection agency can no longer litigate to collect. A collection agency can still report the debt to the credit bureaus, but a great deal of leverage is lost and the chances of collecting become very low. TIP: You can reset the limitation period by getting acknowledgment of the debt in writing or by receiving even a small partial payment.

3. You royally effed up.

If a customer is refusing to pay because you haven’t lived up to your end of the bargain, collecting might be impossible. For example, if you delivered faulty product, sub-par services, a partial order or the wrong items, the debtor may be justified in not paying in full. That’s why it’s essential to work things out quickly whenever there is a problem or dispute. It’s usually worth compromising or going the extra mile to make things right to avoid court costs and reputation damage.


4. You didn’t get it on paper.

If there’s something worse than a legitimate dispute, it’s facing one with inadequate documentation on your side. Businesses in the construction industry run into such problems all the time. Always prepare a detailed scope of work and an iron-clad contract—especially any time the bill amounts to more than you can afford to lose. Being busy is never an excuse: navigating a dispute or a claim later on will definitely take much more time. And so will replacing the lost revenue!

5. The debtor (literally) died.

It happens. When an individual who owes you money passes away, you have a limited amount of time to collect the debt. Once the published deadline for creditors and claimants has passed and the executor has distributed assets to beneficiaries, you have no recourse. If there is still time, you need to act quickly, especially if the value of the estate is less than the combined liabilities. While few collection agencies have expertise in this realm, at MetCredit we have dedicated estate recovery agents who can walk you through the sensitive landscape of deceased collections whether you’re the executor of an estate, or owed money by one.


Human beings are naturally optimistic creatures, and it’s easy to be blindsided by an account becoming unrecoverable. The bottom line is that as a credit grantor, you need to be diligent, be responsible and be proactive. With all five of these cases, procrastination is your biggest risk factor.

Every situation is unique, and Canada’s most reliable collections team is here to help. Call us at 1-888-797-7727 or fill out this quick form to get started.

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Brian Summerflet Author: Brian Summerfelt

President and CEO of MetCredit, Canada's top-performing consumer and commercial collection agency

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