What Is a Statute of Limitations?
A statute of limitations is a law that sets the maximum time after an event within which legal proceedings can be initiated. In the context of debt, it means the creditor must file a lawsuit within a specific period — or they generally lose the right to sue for that debt.
The limitation period does not mean the debt is forgiven, written off, or otherwise resolved. It simply limits the legal tools available to the creditor.
Limitation Periods by Province
| Province | Limitation Period |
|---|---|
| Ontario | 2 years |
| British Columbia | 2 years |
| Alberta | 2 years |
| Saskatchewan | 2 years |
| Nova Scotia | 2 years |
| New Brunswick | 2 years |
| Prince Edward Island | 2 years |
| Newfoundland and Labrador | 2 years |
| Manitoba | 6 years |
| Quebec | 3 years |
Note: Limitation periods apply to most consumer debts. Some specific types of debt — including CRA debt, student loans, and court-ordered obligations — have different rules. Always confirm with a legal professional for your specific situation.
When Does the Clock Start?
In Ontario, the two-year limitation period typically starts from the date of last activity on the account. This is usually the last date you:
- Made a payment on the debt
- Acknowledged the debt in writing
- Made a promise to pay
- The debt became due or the creditor discovered it was owed
This matters because the clock can be reset. If you contact a creditor about an old debt and acknowledge that you owe it — even casually, in writing or by email — the two-year period may restart from that date. The same applies if you make a partial payment.
What Resets the Clock?
The limitation period restarts if you:
- Make any payment on the debt (even a small one)
- Send a written acknowledgment that the debt exists (including email)
- Verbally promise to pay — depending on whether it is documented
This is one reason why dealing with old debts requires care. A well-intentioned call to “sort things out” can inadvertently restart a limitation period that was close to expiring — and give the creditor a fresh two-year window to sue you.
After the Limitation Period: What Changes and What Does Not
Once the limitation period expires, a creditor generally cannot obtain a court judgment against you if you raise the limitation period as a defence. This is a significant protection — no judgment means no wage garnishment, no bank account freeze, and no court-ordered lien.
But the following remains true:
- The debt still legally exists — it is not erased or forgiven
- Creditors can still attempt to contact you and collect voluntarily
- The debt can still appear on your credit report for up to six years from last activity
- If you make a payment or acknowledge the debt, the clock can restart
Waiting for the limitation period to expire is not a substitute for resolving the debt — and for larger debts, it leaves years of credit damage in place while you wait.
CRA and Government Debt: Different Rules
Student Loans
Government-backed student loans (Canada Student Loans) have their own rules. If you have been out of school for seven or more years, student loan debt can generally be included in a Consumer Proposal or bankruptcy. If you have been out for fewer than seven years, it typically cannot be discharged through those processes.
What Are Your Real Options?
Whether your debt is old or recent, within the limitation period or past it, there are legal paths forward that are almost always better than waiting.
A Consumer Proposal can resolve debt that is still within the limitation period by stopping all creditor action immediately and legally reducing what you owe. Our debt settlement service can negotiate lump-sum resolutions with creditors for debts that may be approaching or past the limitation window — because creditors often prefer some recovery over none.
Understanding the limitation period is one piece of the picture. We help you see the full picture.
Have Old Debt You’re Not Sure How to Handle?
Book a free, confidential consultation. We will assess where your debt stands legally and tell you exactly what your options are — with no obligation and no pressure.
Frequently Asked Questions
Does debt go away after the statute of limitations in Canada?
No. The statute of limitations limits a creditor’s ability to sue you — it does not erase the debt. The creditor can still attempt to contact you and collect voluntarily, the debt can still affect your credit report, and if you make a payment or acknowledge the debt in writing, the limitation period can restart.
What happens if a creditor sues me after the limitation period?
You can raise the expiry of the limitation period as a legal defence. If the court accepts that the limitation period has passed, the creditor’s claim will typically be dismissed. However, you must actually show up and raise the defence — if you do not respond to the lawsuit, the court may grant a default judgment regardless of the limitation period.
Does making a payment on old debt reset the clock?
Yes. In Ontario and most Canadian provinces, making a payment — even a small partial payment — on an old debt typically restarts the limitation period from the date of that payment. This gives the creditor a fresh window to sue. Think carefully before making any payment on a debt that may be close to the limitation period.
Is the limitation period the same for CRA debt?
No. The CRA has different and much broader collection powers than private creditors. CRA debt does not follow the standard two-year limitation period and can be collected for ten years or more. The CRA also does not need a court judgment to garnish wages or freeze accounts.
Can I include statute-barred debt in a Consumer Proposal?
Yes. Even if a debt is past the limitation period, you can choose to include it in a Consumer Proposal if you want to formally resolve it and remove the ongoing credit damage. Some creditors with time-barred debt are willing to negotiate settlement for a fraction of the balance, since their legal options are limited. We can advise on whether including these debts makes sense for your situation.
