Under the Limitation Act, a suit on an unpaid invoice must be filed within three years of the due date, but a written acknowledgement or a part-payment by the buyer before expiry starts a fresh three years. MSME Samadhaan references are not bound by the same strict bar. FundRaksha checks every old invoice's dates, sends a notice within 24 hours designed to obtain acknowledgement where time is short, and files before expiry. 30% fee on recovery.
How to tell whether an old debt is still recoverable
- Find the due date of each invoice: the credit period from the invoice date, or the agreed payment date.
- Add three years. That is the base limitation date.
- Look for anything the buyer signed, emailed or messaged acknowledging the balance before that date: a ledger confirmation, a balance confirmation for audit, a promise to pay, a reply to a reminder. Each one restarts the clock from its date.
- Look for part-payments before the expiry date, recorded in your bank or ledger. Each restarts the clock too.
- If the account was a running account with regular debits and credits, limitation runs from the end of the financial year of the last entry.
Use the limitation period calculator for a first view, then let us verify: limitation is decided on evidence, and the details matter.
The acknowledgement strategy
When time is short, the first objective is not payment; it is a written acknowledgement. Buyers who have ignored a debt for two years often respond to an advocate's notice with an email that says, in substance, "we owe this, but we are facing problems". That email restarts limitation. Even a dispute letter that admits part of the balance is an acknowledgement of that part.
FundRaksha's notice within 24 hours is drafted with this in mind: it attaches a statement of account and asks the buyer to confirm or dispute each line. Where the buyer is a company, a request for balance confirmation for audit purposes often produces a signed confirmation from accounts staff who do not realise its effect.
An acknowledgement works only if made before the existing limitation expires. A confession after expiry does not revive the suit, though it may support a fresh promise to pay under Section 25(3) of the Contract Act if in writing and signed.
Routes for old debts
| Age and facts | Best route |
|---|---|
| Under 3 years, documents intact | Notice, then summary suit or Samadhaan as usual |
| Approaching 3 years, no acknowledgement | Immediate notice for acknowledgement; file before expiry |
| Over 3 years, but part-payment or acknowledgement within the period | Limitation restarted; proceed normally |
| Over 3 years, MSME supplier | MSME Samadhaan, which does not apply the three-year bar strictly; Councils weigh delay |
| Over 3 years, no acknowledgement, non-MSME | Negotiated voluntary payment; set-off against anything you owe the buyer |
Why old debts are often easier than you expect
Old debts carry old interest. For an MSME supplier, compound interest at three times the RBI bank rate on a two-year-old invoice can approach the principal; buyers who learn this settle the principal quickly to stop the clock. For a company buyer, an old unpaid MSME invoice is an undisclosed liability in its accounts and a Section 43B(h) issue for its tax, which the finance head would rather close than explain. And an old debt has usually accumulated the acknowledgements that make it legally strong: ledger confirmations, reminders answered, promises made. Our job is to find them.
Fee: 30% of what is recovered, nothing upfront. The free consultation includes a limitation check for every invoice you send us.
Start with the ledger
Export your over-365-day receivables and book a free consultation. We will tell you which are recoverable, which need an acknowledgement urgently and which should be set off or written off. For debts already written off, see bad debt recovery. For MSME suppliers, see MSME Samadhaan filing. For the full ledger approach, see accounts receivable collection.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.