State directory

Collecting debt in Alabama: licensing, bonds and statutes of limitations.

Alabama has no regulatory collection-agency license, registration or bond; a collection agency that employs agents to solicit claims for collection in the state must buy an annual state/county business privilege license under Ala. Code 40-12-80 ($151 total in cities of 20,000 or more, $38.50 in smaller ones, per place of business) from the county probate judge or license commissioner.

License required Written contracts: 6 yearsVerified 2026-09-20

General information, not legal advice. Every figure on this page links to the statute, rule or regulator page it came from, with the operative words quoted, and the date we verified it. Rules change; confirm with the regulator or your counsel before acting, and tell us if something here is out of date.

Licensing and bonding

Do you need a license to collect in Alabama?

Alabama has no regulatory collection-agency license or bond; the only state requirement is an annual revenue privilege license ($151 or $38.50 per office depending on city size, license year October 1 to September 30) that ALDOR says applies only if the agency has agents in Alabama. An out-of-state agency collecting by mail and phone alone with no in-state agents does not need it, but check municipal business-license rules for any Alabama office.

Requirement

License required

Ala. Code § 40-12-80

Regulator

Alabama Department of Revenue, Business and License Tax Division (state/county privilege license sold by the county Probate Judge or License Commissioner)

Licensing page

Surety bond

None

No surety bond is required by Ala. Code 40-12-80 or any other Alabama statute located; Title 40 Chapter 12 Article 1 (general provisions) contains no bond requirement for collection agencies, and ADOR's bond FAQ lists bonds only for motor fuel licenses. Third-party compliance sites claiming an Alabama State Banking Department collection-agency license with a bond ($5,000 or $10K-$50K) are not supported by any primary source; the Banking Department's Bureau of Loans page lists only small loan, consumer credit, pawn, mortgage broker, deferred presentment and SAFE Act licenses.

Ala. Code § 40-12-80 (no bond provision)

NMLS

No

No collection-agency license exists to be administered through NMLS; the privilege license is purchased from the county probate judge / license commissioner. Alabama Banking Department uses NMLS only for its own license types (mortgage, consumer finance), none of which cover collection agencies.

Application fee

$151

Tiered by city population and charged per place of business. Cities of 20,000 or more: $100 state tax + $50 county levy + $1 issuance fee = $151 total. Cities under 20,000: $25 state + $12.50 county + $1 issuance fee = $38.50 total. State amounts from 40-12-80; county levy of 50 percent of the state amount from 40-12-2(e); $1 issuance fee from 40-12-2(b). Totals as printed in the ALDOR Handbook of Privilege and Store Licenses (Oct. 2022), § 40-12-80 table. Statute last amended by Act 2001-454. Municipal business license fees (Ala. Code 11-51-90) are separate and vary by municipality.

Ala. Code §§ 40-12-80, 40-12-2(b), 40-12-2(e); ALDOR Handbook of Privilege and Store Licenses (Oct. 2022), § 40-12-80

Renewal fee

$151

annual, renews October 1 (license year October 1 to September 30; delinquent November 1)

Ala. Code §§ 40-12-26, 40-12-10(e)

Branches and other fees

See note

Ala. Code 40-12-2(c): 'there shall be collected both a state and county license for each place of business, except as specifically otherwise provided.' ALDOR Handbook interpretation for § 40-12-80: 'The license is due for each place of business, and is based on the agency rather than number of agents who are employed by such agency.' 40-12-9(b): no person may sell throughout the state under one license except by special provision of law. Municipal business license taxes may also apply under Ala. Code 11-51-90 (see local_licenses).

Other requirements

4 items

state and county privilege license for each place of business (Ala. Code 40-12-2(c); ALDOR Handbook § 40-12-80 interpretation); license in every county where business is conducted (ADOR); municipal business license where the agency has an office or transacts business in a municipality (Ala. Code 11-51-90); criminal penalty for operating without the license: fine of not less than all licenses due, up to $100 additional, up to six months hard labor (Ala. Code 40-12-9(a)); agents of an unlicensed person face the same penalty (40-12-18)

Who needs it

Third-party collection agencies

It depends

Debt buyers

It depends

Collection law firms

Not established

Out-of-state agencies collecting from residents

It depends

Original creditors collecting their own accounts

No

Exemptions. Ala. Code 40-12-80: 'This section shall not apply to any person who is excluded from the definition of the term "debt collector" under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692a(6).' That definition excludes, among others, creditors collecting their own debts in their own name, their officers and employees, and persons collecting debts not in default when obtained. ALDOR Handbook (Oct. 2022) interpretations: an out-of-state agency soliciting by letter and/or phone only with no agents in the state needs no license; no license is required when an agent enters the state solely to solicit clients; a person who employs agents to repossess cars only is not subject unless the agent also solicits claims for collection.

City and county licenses

All Alabama municipalities (general municipal business license, not collector-specific)
Municipal license/revenue office of the city or town where the agency has an office or transacts business, under Ala. Code 11-51-90
Ala. Code 11-51-90(a)(1): municipalities may 'license any exhibition, trade, business, vocation, occupation, or profession not prohibited by the Constitution or laws of the state which may be engaged in or carried on in the municipality.' For interstate-commerce businesses the municipal license is confined to where the taxpayer has an office or transacts business in the municipality. ALDOR Handbook tells owners to check with the municipality where the business is located. No collector-specific municipal license found.
Regulator page

Statutes of limitations

How long can a debt be sued on in Alabama?

Credit-card debt in Alabama is three years if sued as an open account, but a creditor that pleads and proves an account stated or a written contract gets six years. A payment made after the period has run does not revive the debt; only a signed, unconditional written promise does.

Type of debt

Period

Where it says so

Written contract

6 years

Ala. Code § 6-2-34(4), (9)

“The following must be commenced within six years: ... (4) Actions founded on promises in writing not under seal; ... (9) Actions upon any simple contract or speciality not specifically enumerated in this section.”

Oral contract

6 years

Ala. Code § 6-2-34(9); see also § 6-2-34(5) (loans, stated or liquidated accounts)

“(5) Actions for the recovery of money upon a loan, upon a stated or liquidated account or for arrears of rent due upon a parol demise; ... (9) Actions upon any simple contract or speciality not specifically enumerated in this section.”

Promissory note

6 years

Ala. Code § 7-3-118(a), (b) (UCC 3-118); see also § 6-2-34(4), (5)

“an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.”

Open account and credit card

3 years

Ala. Code § 6-2-37(1); Ayers v. Cavalry SVP I, LLC, 876 So. 2d 474 (Ala. Civ. App. 2003); Cook v. Midland Funding, LLC, No. 2140786 (Ala. Civ. App. May 13, 2016)

“The following must be commenced within three years: (1) Actions to recover money due by open or unliquidated account, the time to be computed from the date of the last item of the account or from the time when, by contract or usage, the account is due”

The statute is silent on credit cards; the category turns on how the creditor pleads. Ayers (Ala. Civ. App. 2003), a debt-buyer suit on a U.S. Bank credit-card account, treated the claim as one on an open account: '§ 6-2-37(1), Ala.Code 1975 (statute of limitations for cause of action alleging an open account is three years).' Cook v. Midland Funding (Ala. Civ. App. 2016) held: 'A six-year statute of limitations is applied to claims on an account stated and for actions based on a contract. § 6-2-34(5) and (9)' and the debtor 'does not have the ability to recast Midland's account-stated claim as an open-account claim ... because, generally, each plaintiff is the master of its own complaint.' Bankr. S.D. Ala. (No. 14-00075, 2015) reasoned 'credit card arrangements appear to be open accounts.' Result: 3 years if pleaded as open account; 6 years if the creditor pleads and proves an account stated (statement rendered, no timely objection) or a written contract. Both passes agreed; the reconciler re-read Ayers and Cook and confirmed both quotes.

Judgment

20 yearsrenewable

Ala. Code § 6-2-32; §§ 6-9-190, 6-9-191, 6-9-192

“Within 20 years, actions upon a judgment or decree of any court of this state, of the United States, or of any state or territory of the United States must be commenced.”

When the clock starts, and what restarts it

Accrual

Open account: the statute fixes accrual 'from the date of the last item of the account or from the time when, by contract or usage, the account is due' (§ 6-2-37(1)). Notes: six years 'after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date' (§ 7-3-118(a)); demand notes, six years after demand (§ 7-3-118(b)). Written contracts: from breach (general rule; no more specific statutory text located). Judgments: revival barred after 20 years from entry (§ 6-9-190); a judgment is presumed satisfied if 10 years pass without execution and must be revived before execution issues (§§ 6-9-191, 6-9-192).

Ala. Code § 6-2-37(1); § 7-3-118; §§ 6-9-190 to 6-9-192

Partial payment restarts the period

It depends

Ala. Code § 6-2-16

“No act, promise, or acknowledgment is sufficient to remove the bar ... except a partial payment, made upon the contract by the party sought to be charged before the bar is complete or an unconditional promise in writing signed by the party to be charged thereby.”

Written acknowledgment restarts the period

It depends

Ala. Code § 6-2-16

“except a partial payment, made upon the contract by the party sought to be charged before the bar is complete or an unconditional promise in writing signed by the party to be charged thereby.”

Borrowing statute

Yes

Ala. Code § 6-2-17

Quote: 'When the statute of limitations of another state or foreign country has created a bar to an action upon a contract made or act done in such state or country while the party sought to be charged thereby was a resident of such state or country, the bar thus created is effectual in this state.' Narrow: applies only where the defendant was a resident of the other state when the contract was made, and it only imports a bar, never a longer period.

Time-barred debt

Status after the period runs

Unenforceable

The debt exists but cannot be sued on; a suit can be defended by raising the defense.

Collector must disclose that the debt is time-barred

No

A payment revives a time-barred debt

No

Ala. Code § 6-2-16

The statute addresses the barred debt directly: a partial payment removes the bar only if made 'before the bar is complete'; a payment after the period has run does not revive. A time-barred debt can be revived only by 'an unconditional promise in writing signed by the party to be charged' (§ 6-2-16), which carries no before-the-bar limit. Limitations is an affirmative defense that removes the remedy, not the debt, so status is unenforceable rather than extinguished.

Sources

Where this page comes from.

Researched in two independent passes from primary sources (the statute, the administrative code and the regulator's own pages), then reconciled against the text where the passes disagreed. Verified 2026-09-20. Licensing is re-verified quarterly and limitation periods annually.

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