Business Installment Agreements & Statutes of Limitation

Geoff Trachtenberg

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Say someone owes you $100 and agrees to pay you in $10 monthly installments. What if they pay the first two installments, miss the third one, pay the fourth installment and miss the fifth installment. When does the statute of limitations begin to run?

The answer is that there is a new accrual date for each missed installment, unless there is an acceleration clause in the agreement. In addition, since such acceleration clauses are typically optional, they do not affect the running of the statute of limitation unless they are exercised by the creditor demanding full payment on a note before all remaining installments become due. Navy Federal Credit Union v. Jones, 187 Ariz. 493, 930 P.2d 1007 (App. 1996) (action to recover unpaid installments, limited by A.R.S. § 12-548, accrues on the date each installment payment becomes due).