September 5, 2017


The Limitations Act of Ontario sets the basic limitation period at two years.  Accordingly, if you owe a debt, that you have stopped making payments on for a period of two years or more the creditor is “barred” from resorting to legal proceedings to collect the obligation.   In other words the creditor can no longer sue you, therefore, even though a collector may threaten otherwise, they are unable to garnishee your wages.

What is also interesting about debts that are “Statute Barred” is that the creditor is not entitled to share in any proceeds collected through an insolvency proceeding, either a bankruptcy or a proposal because both are legal proceedings. 

However, what tends to happen with Statute Barred debts is that they are traded around from collection agency to collection agency and the debtor(s) frequently gets treated badly by intimidation from collection agencies.  At my office we have had occurrences of illicit behaviour from several national collection agencies.

Sadly for the unwitting debtor, coercion and even illegal threats  are commonplace even though collection agencies are regulated.