If you have missed payments on your debt, chances are you might have come across debt collectors calling you to ask about your payment plans. Have you ever wondered how long they can go after you? What are some measures they can use to try to collect the debt you owed? Do they just go away after a certain period of time? This article will help answer some of these questions and will help you prepare better in case you ever fall into this situation.
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How Long Can Debt Collectors Try To Collect In Canada?
The simple answer to this question is forever. A creditor has the right to the repayment of his/her money and can keep on requesting for the repayment for as long as possible until it is paid. As long as nothing illegal is done or no rule is broken, a creditor can keep asking for his/her money indefinitely, till it is paid.
However, there are periods when you may not hear from the creditors again. This does not mean you are out of the woods yet. Sometimes, creditors, which may include individuals and financial institutions, may sometimes transfer the responsibility of debt collection to an institution/debt collection agency. These third parties will continue to attempt to recover the unpaid debt from you and you should expect to receive debt collection calls. Some debt collection agencies may even further transfer to other debt collection agencies and the process starts up again.
While there is no time limitation on the duration of which debt collectors can try to collect the debt, there is a limitation on the duration if they want to take you to court to collect their debt.
What Are The Limits To Debt Collectors In Canada?
Debt collectors are third parties that are employed by the original creditor to help with the collection of debts from the debtor. Creditors usually place the account of a debtor with a debt collector agency for a specific period, usually between 6 months to 12 months. If after awhile, the debt collector was not successful in the collection of the debt, creditors may recall the account and place it with another agency.
The general rule is that provinces and the federal government do not have legislations that regulate the activities of a creditor or their debt collectors. This means that the law does not protect you against your creditors who are trying to collect their own debts. It also does not apply to debt collectors directly hired by the creditor. This means that if you are receiving embarrassing phone calls from the creditor or the debt collector hired by him/her, there is nothing you can do about that.
However, the Federal Government has enacted some laws to protect debtors that owe money to federally regulated financial institutions. In other words, if you are receiving debt collection calls from banks or credit card companies, regardless of who employed the debt collector, you can approach a federal regulator to file a complaint.
It is also illegal to be receiving debt collection calls from two separate debt collectors simultaneously. This means that it is illegal for a creditor to place an account for collection with different collection agencies. This occurs if the creditor does not cancel the account of the debt or with the first debt collector. It is also illegal for a debt collector to try and collect debt for an account it will not be compensated for. All these occur on rare occasions but it is important to know what the limitations of debt collectors are.
What Happens When Limitation Period Passes?
If you have been owing for a while and you keep wondering when the creditor will stop requesting their money, you may be in for a long wait. As discussed earlier, creditors can request their money indefinitely. There is no statute of limitations on how long creditors can try to collect their money. What there is a limit to is the duration of time in which the creditor can sue you. This duration depends on the province you live in Canada and they are contained below:
- New Brunswick – 6 years
- Ontario – 2 to 6 years
- Prince Edward Island – 6 years
- Quebec – 3 years
- Saskatchewan – 2 years
- Yukon- 6 years
- Newfoundland and Labrador – 2 years
- Nova Scotia – 2 years
- Northwest Territories – 6 years
- Alberta – 2 to 10 years
- British Columbia – 2 years
- Manitoba- 6 years
- All of Canada (federal regulation) – 6 years
It is not uncommon to have some debt collectors that continue to harass debtors with legal action well after the limitation period has passed. If you find yourself in such a situation, you can do any of the following:
- Inform the Agency – It may be a lapse of judgement on the part of the debt collector. Therefore, you can inform the agency and let them know that the statute of limitation has passed for your debt. You can do this via e-mail and keep a record of the correspondence. If you can do this, this will deter the agency from continuously harassing you, especially if it is intentional.
- Report the Agency – If the harassment from the agency persists even after informing them of the statute of limitation, you can proceed to report them. You can file a complaint with your province’s Consumer Affairs Office.
All in all, while creditors and debt collectors have the right to continue requesting repayment of the debt, they do not take legal action against you after the expiration of the statute of limitation, depending on the province you live in.
How To Deal With Debt Collection Agencies
Debt collectors trying to collect their debt are only doing their job as requested by your creditor and the creditor is also on his/her right for asking for repayment. How do you then deal with their persistent phone calls? These phone calls are usually intense but it does not have to be filled with hate and recriminations. Here are a few tips you can adopt when next the debt collector reaches out to you:
1. Keep Calm
This is the first rule. Debt collection discussion can be quite intense because both sides are trying to make their points. These calls may be used against you if you act violently and it is to your disadvantage. Therefore, it is important to always be calm when speaking to the debt collector. Keep your temper and emotions in check.
2. Reschedule for A Discussion
When the call comes in, if you are not in a good mood, ensure that you do not rush through the call. If it is not convenient, you can request to discuss another time when you can keep your cool.
3. Record The Call
Most debt collectors record their calls with you, especially if you react violently. The call can be used against you if the matter goes to court. It is in your best interest to also record the conversation. You should pay particular attention to the following information:
- The original creditor
- Date and time of the call
- Caller’s full name and contact number
- Name and address of collection agency
- The amount they say you owe
- Frequency of calls (including the number of days between calls)
4. Do Not Admit Liability
This is important, especially during the first few stages of debt collection. You need to confirm the said original creditor and if the debt is indeed yours. Request proof and make sure you do not admit to owing these debts until you seethe proof. Always have it at the back of your mind that these calls are recorded and it may be difficult if you have already admitted to owing.
5. Do Not Share All Your Personal Details
Make sure you do not share important information with the debt collector. Information like income, investments, assets and employment are what you do not want to reveal to the debt collector willingly. This can be used against you to prove that you are capable of paying the debt you owe. They may have some of your personal details from your credit report, avoid confirming the details. Request a copy of the report before you confirm.
Also, always be on the lookout for calls after the limitation period. If the debt collector threatens you after this period, you may consider reporting the agency to the appropriate authority. Dealing with debt collectors requires smart maneuvers.
Exceptions To Debt Collection Limitations
The statute of limitation on debt collection as discussed above is dependent on the province you live in. However, there are some exceptions that this statute of limitation does not apply. In other words, if you owe the following debts, the creditors can bring legal action to retrieve the debt anytime.
- Child support or spousal support.
- Debts arising from fraud.
- There is an ongoing lawsuit initiated by the creditor regarding an unsecured debt against the debtor before the expiration of the relevant limitation period.
- Court fines.
- Student loans.
- Secured debt (i.e., mortgages and car loans.)
- Unsecured debt where the creditor has obtained a judgment against the consumer.
- Monies owed to the government.
Six to seven years is the length of time a debt becomes uncollectible in Canada.
After 7 years of not paying debt in Canada, the debt disappears on the credit report. However, A creditor could still attempt to collect outstanding debts from you after 7 years. But they may not be able to take you to court.
If you don’t pay debt collectors in Canada, they may take legal action against you in order to collect the debt. Wage garnishment or putting a lien on your property are examples of this. It can also harm your credit score and make future credit applications more difficult.
A debt can become uncollectible after six to seven years in Canada. It may also be uncollectible when the debtor passed away.