Most debts in Ontario are subject to a two-year limit. This is known as the Statute of Limitations. If any creditors (the companies you owe money to), or the collection agencies they have contracted or sold your debt to, have not reached out to you by letter, text message or telephone to demand a repayment of the debt within two years of the last payment you made on that account, it may be possible for you to use the Statute of Limitations defense against any lawsuit initiated in court.
A successful Statute of Limitations defense prevents any collection agency or lending organization from demanding a garnishment of your wages (a method of ensuring repayment through your paycheque and employer, as ordered by the Court). Such a defence would also prevent any company you owe money to from placing a lien (a claim against your assets) on your property.
Although the Statute of Limitations may apply with some of your debt, in most provinces in Canada the debt is not gone. A company you owe money can still demand payment from you. The company you owe money can attempt to collect from you for several months and then either involve the services of a collection agency to go after you on their behalf or sell the debt directly to the collection agency and let them chase you down.
In the first scenario, it is not unusual for multiple collection agencies to be hired to track you down for any amounts owing. And if any company you owe money to cannot prove they were in touch with you directly (or through a collection agency) within the two-year Statute of Limitations period, it is unlikely an Ontario judge will allow a garnishment of your wages, a bank account freeze, or a lien on any assets you own. However, if the collection agency can prove contact over the two-year period, then a garnishment could be successfully registered against you in Court and an Order to Remit notice sent to your employer.
Let us assume you live in Ontario and the collection agencies failed to speak or contact you during the required two-year period. Are you off the hook for those debts owed? Yes and no. Your paycheque is safe from garnishment but your credit history with either Equifax or TransUnion (the two major credit bureaus operating in Canada) will typically retain a history of the amounts owing to any creditor (and any attempts to collect) on for a period of six to seven years. In some cases, a company is allowed to keep an outstanding debt on your credit report for longer than that period. That could make it more difficult for you to acquire new credit.
And that overly aggressive collection agency who drives you up the wall? The one that calls you consistently at 8 AM every Sunday and all weekend? They can legally continue to call, text, and write to you as they make attempts to collect on any debt owed. But they cannot take you to court any longer once the Statute of Limitations deadline is in place. And if they threaten you with court, you will know their threats are hollow and false.
So how do you make the debt go away forever? One way to deal with the debt, avoid bankruptcy, keep your assets safe and have irritating calls and letters from those collection agencies stop is to consider a Farber Consumer Proposal. Administered by our Licensed Insolvency Trustees, a Farber Proposal can reduce the amount of debt you will need to repay, set you up with one convenient monthly payment over a multi-year period and help put an end to your debt and those collection calls – forever.
Do you feel like you could use some help to get things back on track? We are here to help. Click the FREE CONSULTATION button below or give us a call!