Time limitation on collecting a debt in Ontario
In Ontario, an unsecured creditor has a legal right to collect on an unpaid debt no later than two years from the date of the last activity on the account.
Unsecured creditor means a creditor that has not registered a mortgage or a lien on a piece of property such as a house or car, a credit card is normally an unsecured creditor.
Last activity means the date of the last payment, even a partial payment, or the date the debtor last acknowledged owing the debt to the creditor.
Therefore, the debt does not have to be repaid if you have not made a payment on the credit card for more than two years and they did not start a legal action against you within that two year time period.
This, however, will not stop all actions by debt collectors and collection agencies. Collectors will continue to contact you and they may threaten legal action as they are aware that most Ontarians are oblivious to this time limitation. In such a case, inform the Collector never to contact you again and under no circumstances should you acknowledge that you owe the debt to the creditor or the collector as this will restart the two year time period.
Further, Collectors still have the ability to report the unpaid debt to credit reporting agencies, such as Equifax and Trans Union. This unpaid debt will remain on the debtor’s credit report for six years from the date of the last activity, thereafter it will be automatically purged by Equifax and Trans Union.
If you see an unpaid debt or discrepancy on your credit report, you can challenge the discrepancy by completing the attached Consumer Credit Report Update Form and providing all the relevant documents:
- photocopies of all necessary documents
- legal documents
- proof of current address
- photocopies of two pieces of identification