What Is Re-Aged Debt?

Both the Federal and Provincial Governments of Canada have statutes of limitation, which state the maximum, legal time that a lender or creditor has to peruse legal action on an unsecured debt. These laws state that if an unsecured debt is not collected and payments are not being made, within an allotted period of time, creditors and collection agencies cannot take legal action against you.

Statute Of Limitations By Province

According to the Federal Government of Canada, debt generally cannot be pursued after 6 years. Based on which province you live in, the statute of limitations will vary, typically ranging anywhere from 2 to 10 years.

British Columbia	6 years
Alberta	2 years*
Saskatchewan	2 years
Manitoba	6 years
New Brunswick	6 years
Newfoundland and Labrador	2 years
Nunavut	6 years
Nova Scotia	6 years*
Ontario	2 years**
Quebec	3 years
Prince Edward Island	6 years
Yukon	6 years
North Western Territories	6 years

* The statute of limitations can be extended to 10 years if there’s a court judgment before the expiry of the original statute of limitations.

**If you make a payment towards your outstanding debt or acknowledge your debt before the end of your statute of limitations, then the statute of limitations rest.

How Does it Work?

Let’s say you live in Ontario and haven’t made any payments on your car loan. Your debt collector has up to two years to collect the outstanding debt and pursue legal action against you. If two years pass and you still haven’t made any payments toward your car loan, your debt collector cannot take legal action.

However, this does not mean that they cannot attempt to collect the debt from you. They can still contact you in an effort to collect payment. However, they cannot take legal action against you such as suing you to court.

Find out what happens when you miss a loan payment.

Creditors and collectors can reset this statute of limitations, which extends the amount of time that creditors and collectors can use the law in order to collect a debt. Resetting this law is based on the actions of you, the borrower. Any of these actions can re-age the debt, which basically resets the statute of limitations. With your debt re-aged, collectors have the time and right to take legal action in order to collect the debt.

Any Payments – if you make a payment on your debt, it will activate the re-ageing process and you will again be responsible to pay back your debt.
Acknowledgement of debt – if you inform (in writing) the debt collector or creditor that you have intentions to pay in the future, your debt will be renewed.

What Should You Do If Your Creditor Tries to Contact You?

Past the Statute of Limitations

If creditors or collection agencies ever contact you, do not answer their questions or give out voluntary information. Instead, take down their personal information and the details about your debt, mainly when your debt became past due. Verify the information and see if it’s correct. If your debt has passed the statute of limitations for your province, collectors are not legally allowed to sue you in order to collect the outstanding debt.

Before the Statute of Limitations

If a collector contacts you before the statute of limitation, then they have the right to take you to court. If they file a lawsuit against you, you will be notified. It may be in your best interest to speak to the collector and come up with an agreement.

Statute of Limitations FAQs

Will my debt be erased after the statute of limitations period?

No, your debt does not disappear once it’s past the statute of limitations. Debt collectors simply won’t be able to take legal action against you. However, they can still contact you to try and collect payment.

What can reset the statute of limitations period?

If you make a payment to the debt or if you send a letter acknowledging the debt, the statute of the limitation period can be reset.

Will my debt disappear from my credit report after 6 years?

After 6 years unpaid accounts will disappear from your credit reports, however, that doesn’t mean you are debt-free. Your creditor or debt collector can continue to contact you for payment as long as they wish.

Bottom Line

It is extremely important to know the rules and regulations concerning debt collection, as this can prevent you from being taken advantage of. On the other hand, it should always be your number one goal to pay back your creditors and work toward being debt-free. Always check the statute of limitations for your province, and verify how long your creditor or lender has to take legal action against you.

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Caitlin Wood

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.