Why People Avoid Dealing with Debt
It is worth saying plainly: ignoring debt is usually not a choice made out of carelessness. Most people who stop opening their mail or answering calls from creditors do so because the anxiety of facing the problem feels worse than not facing it.
Shame plays a big role. So does hopelessness — the sense that the debt is too large to ever resolve, so why try?
Both are understandable. Neither is accurate. The debt is almost certainly more manageable with legal help than it feels in isolation — and the cost of continuing to ignore it compounds over time.
The First 30–90 Days: Fees, Interest, Credit Damage
The moment a payment is missed, your creditor begins charging late fees and interest on the growing balance. After 30 days, the missed payment is reported to Equifax and TransUnion. Your credit score starts to drop.
The damage at this stage is real but recoverable. Many people who address debt early — even just by contacting the creditor — find they can avoid most of the downstream consequences.
90–180 Days: Collections Begin
After 90 to 180 days without payment, most creditors send the account to a collection agency or an internal collections department. The calls start — sometimes multiple times a day. Letters arrive. The collection account is added to your credit report, causing further damage.
A collection agency may also purchase your debt outright from the original creditor. At that point, they own the debt and are pursuing collection for their own account.
Many people at this stage feel there is nothing they can do except wait it out. There is not. This is actually one of the best windows to take action, because the creditor has not yet pursued legal remedies.
Before making any payments to a collection agency, read our article on why you should never pay a collection agency without understanding your rights first.
6–12 Months: Legal Action Becomes a Real Risk
If the debt remains unresolved and the amount is large enough, the creditor or collection agency may file a lawsuit. In Ontario, they generally have a two-year window to do this — starting from the last date you made a payment or acknowledged the debt.
If they win in court, they receive a judgment. That judgment gives them the legal authority to:
- Garnish your wages — your employer is ordered to withhold a portion of your pay and send it directly to the creditor
- Freeze or garnish your bank account
- Place a lien on property you own
A wage garnishment can begin without any further warning to you. Many people learn about it when their pay is short on payday.
CRA Debt: A Different and More Urgent Problem
Does Debt Expire in Canada?
This is one of the most misunderstood points about debt in Canada. Ontario’s limitation period of two years limits the time a creditor can sue you — but the debt itself does not expire.
After the limitation period closes, a creditor generally cannot obtain a court judgment. But they can still:
- Continue to attempt to contact you and collect voluntarily
- Report the debt on your credit report for up to six years from last activity
- Sell the debt to another collection agency, which may pursue it further
Waiting for debt to “time out” is not a strategy. The credit damage continues, and depending on the creditor, collection pressure may not stop.
What You Should Do Instead
The earlier you act, the more options you have and the less expensive the resolution. Here is what action actually looks like:
- Talk to a debt lawyer. Understanding your legal options costs you nothing at the consultation stage and often changes the entire picture of what is possible.
- Consider a Consumer Proposal. If you have $10,000 to $250,000 in unsecured debt, a Consumer Proposal stops all collection activity immediately, reduces what you owe, and gives you up to five years to repay — without bankruptcy.
- Consider debt settlement. For some situations, our debt settlement service can negotiate a lump-sum resolution with creditors before legal action begins.
We work with clients who are days away from a garnishment starting. We work with clients who have been avoiding their debt for five years. There is almost always a legal path forward — but it requires taking the first step.
You’re Not Stuck. Let’s Talk.
A free, confidential consultation will tell you exactly where you stand and what your options are — regardless of how long the debt has been building. No judgment. No pressure.
Frequently Asked Questions
What happens to debt after 7 years in Canada?
After seven years — or more precisely, six to seven years depending on the province and credit bureau — most negative items fall off your credit report. But the debt itself does not legally disappear. Creditors can still attempt to collect, and if you make a payment or acknowledge the debt, it can reset the limitation period for legal action. Falling off your credit report is not the same as being forgiven or discharged.
Can you go to jail for ignoring debt in Canada?
No. Unpaid consumer debt is a civil matter, not a criminal one. You cannot be arrested or imprisoned for owing money to a creditor. Creditors must use civil courts to collect, and the enforcement tools available to them — garnishment, liens — are financial, not criminal.
What happens if I move provinces to avoid debt?
Moving does not eliminate the debt, and it does not reset the limitation period. Creditors can still pursue you in the province you moved to, and court judgments from one province can typically be enforced in another. The debt follows you.
Will debt collectors stop calling if I ignore them long enough?
In most cases, no — at least not quickly. Collection agencies are persistent, and silence on your end does not discourage them. Under Ontario law, you can request in writing that they only contact you by mail, which limits calls. But the calls stopping does not mean the debt is resolved — it may simply mean the agency is escalating toward legal action instead.
Is it too late to do a Consumer Proposal if I already have a judgment against me?
No. A Consumer Proposal can still be initiated even after a judgment has been issued, and the stay of proceedings that comes with it stops enforcement of that judgment — including active wage garnishments. If you have a garnishment running right now, contact us as soon as possible. Every pay period costs you money that could have stayed in your pocket.
