What is Re-Aged Debt?

What is Re-Aged Debt?

Written by Caitlin Wood
Last Updated August 11, 2020

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 can’t take legal action against you.

Learn about the difference between unsecured and secured debt, here

Statute Of Limitations by Province

According to the Federal Government of Canada, debt 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
Alberta2 years*
Saskatchewan2 years
Manitoba6 years
New Brunswick6 years
Newfoundland and Labrador2 years
Nunavut6 years
Nova Scotia6 years*
Ontario2 years**
Quebec3 years
Prince Edward Island6 years
Yukon6 years
North Western Territories6 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 (can’t make your loan payments on time? Click here) 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.

Exceptions to the Rules

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 make the debt re-aged, which means the debt is reopened, and collectors have the right to sue 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 the debt collector or creditor that you have intentions to pay in the future, whether it is in written or verbal form, your debt will be renewed. So, choose your words carefully when speaking to collectors and don’t be tricked into saying you’ll make future payments. 

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

However, if a collector contacts you within the allotted period of time, you have an obligation to pay. If the collector refuses to give out any information, they may be trying to mislead you into admitting that you’ll make a payment.

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.  

Want more information about the debt collection process in Canada? Read this article.

Rating of 5/5 based on 190 votes.

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.

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