Ontario Debt Collection Statute of Limitations

Ontario Debt Collection Statute of Limitations

Written by Kale Havervold
Fact-checked by Caitlin Wood
Last Updated February 9, 2018

Managing and controlling your debts are very important things in life. You never want to take on more debt than you can afford and always want to make sure your regular payments are within your budget. It’s all too easy to get caught up adding more debts than you can afford.

Already in debt? Here are some loans and programs to help you get out.  

Of course, you could just opt to never take out a loan and never rack up debt, but for most people, that would mean never getting a house or a car. Plus, loans can be a great way to get extra cash whenever you need it, and it is easy to find affordable loans in today’s marketplace. As long as you do your research and have a budget laid out, getting a loan shouldn’t be an issue.

However, problems can begin to arise when you start to become delinquent on your debts and stop making payments. Not only will you begin to incur a variety of fees, the debt will begin to affect your credit score and credit report. On top of this, there is a chance that the lender could enlist the services of a debt collection agency to push you to pay off your debts. So, before we go any further, what exactly is a debt collection agency?

What happens if you stop paying your credit card bills? Find out here.

What is a Debt Collection Agency?

A debt collection agency is a company or firm that is hired by a lender to help get borrowers to pay off their debts. Debt collection agencies often employ much more persistent and aggressive tactics than lenders in order to get people to pay what they owe. If you have a large unpaid debt, these firms can also sue you if you refuse to pay following a certain number of requests. You may have heard stories from friends or family members about dealing with debt collectors and we can assure you, it is not a fun experience.

To learn more about the debt collection process in Canada, click here.

Of course, there are rules and regulations surrounding what they can and cannot legally do to collect your debt. The things they can do include calling you, calling friends and family (but only to get your phone number and address), calling your employer (to verify employment) and more. However, there are strict times where they can and can’t call you, and they aren’t allowed to use threatening or harassing language.

For a detailed look at these laws and regulations, be sure to check out the Collection and Debt Settlement Services Act. It will include all you need to know about what is allowed and disallowed by law.

What is the Process for Dealing With a Debt Collector?

So, while this can sound intimidating, it isn’t so bad if you have a better understanding of the process that a debt collector will use when reaching out to you. The first contact will be in the form of a letter, which the debt collection company will send, letting you know that they would like you to start paying your debts. A few days after the letter, they will call you and ensure that you know who they are, how much you owe and other relevant information.

Then, it is up to you to work out a way to pay your debts. Most debt collection agencies will offer you a few different payment options. Of course, you can opt to pay it off in full, but you can also work out a payment plan or even try for a settlement, which could end in you paying off only a portion of your original debts.

Read this to learn how debt settlement affects your credit.    

If you don’t pay up or don’t answer their calls, there is a good chance that they will continue pestering you nearly every day. Eventually, if the debt is large enough, they might try to take legal action against you.

Can Your Debt Be Eliminated by the Statute of Limitations in Ontario?

While everyone should look to pay their debts, some people might have the idea to dodge it long enough for the statute of limitations to kick in. The statute of limitations is a law that sets the maximum time that people have to pursue legal action from the time of the original offense. The actual time of the law depends on which province you are in. In Ontario, the term for the statute of limitations is 2 years.

While it’s true that if enough time passes, the debt collector will be unable to sue you in court for the money you owe, but that doesn’t mean you’re home free. Just because they cannot sue you, doesn’t mean the debt will just magically go away. It will still be yours to pay (and they can still pester you to pay it) and it will still negatively affect your credit report and credit rating. So, if you leave it long enough you may dodge legal action, but your credit will be in shambles and it will take a lot of time to recover.

If you are going to take advantage of this “waiting game”, however, there is something else you should know about it. If you acknowledge the debt or make a partial payment, the limitation will reset and it will be another two years until the term is up again.

What To Do If a Debt Collector is Breaking the Law or Harassing you?

Despite the many laws and regulations put in place to protect consumers from debt collectors, some of them will still push beyond the legal limit of what they are allowed to do. For example, even though the Ontario statute of limitations has its term set after 2 years, the collector might still try and sue you in hopes that you don’t know about the statute of limitations law in Ontario.

If you feel this is the case and you are being harassed, or they are breaking the law, there is something you should do. First and foremost, you need to let them know that their actions are disturbing you. Voice your concerns about their behaviour and see if it stops. If it does not, you can file a complaint with the government. You will need to provide supporting documents and proof to the government, which could include phone recordings, letters, or testimonies from friends, family members, or your employer. While most debt collectors abide by the laws religiously so they don’t get in trouble or lose their license, that isn’t always the case, so it is a good idea to be prepared for anything.

For some ways of dealing with debt collection scammers, read this.

Paying Your Debts to Avoid the Actions of Collection Agencies  

In conclusion, the statute of limitations can help you not be sued as a result of your debts, but it doesn’t eliminate the debt completely. The debt is still yours to pay and will leave a huge black mark on your credit score and credit report if it goes unpaid for too long. So, instead of letting your debts run their course to protect yourself from being sued, do your best to work out a way of paying them before things get to this level.

Rating of 4/5 based on 85 votes.

In his over six-year career as a professional writer, Kale has focused on writing about finance, technology, cryptocurrency, entertainment, and sports. Kale's work has been published on Yahoo, RentHop, the Regina Leader-Post, LoansCanada.ca, and ReboundFinance.com. Kale loves to create a wide variety of personal finance-related content. Including everything from how-to guides to featured articles, to advice pieces and everything in between. Whether he’s writing about the newest piece of technology or providing tips to help people with their finances, Kale is passionate about educating Canadian consumers and making sure they have the information they need to make the best decisions.

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