There are many different ways for a person to acquire debt today, and it is very easy for someone to get in over her head. It is also common for consumers to get a phone call about a debt long forgotten. The question is whether you have to pay this debt. The answer is that if the statute of limitations has passed, you never have to repay the debt.
The Purpose
The main purpose for a statute of limitations on a debt is to protect the consumer. If a debt has been left inactive for a certain period of time (determined by the location of the consumer), the debt can no longer be collected on. This protects the consumer from being collected on by debts that have long been forgotten. It is not uncommon for collectors to begin calling five or even 10 years after a debt has been left inactive. They often demand payment in full or threaten a lawsuit. The statute of limitations is to protect people from scenarios such as this.
Why is This Law Ignored by Collectors?
Debt collectors know that some consumers are completely unaware that debts have a statute of limitations and will take advantage of this fact. Most often the person is in a place where she can now pay the debt, and even if she isn't, she will typically find a way to settle the debt to avoid the lawsuit. A common trick is to get the consumer to admit that the debt is hers, which automatically resets the clock and the debt becomes active again. This is why it is important to never acknowledge a debt until you're sure it's yours and that you are required to pay it. Always use the term "alleged debt" when referring to a debt you're unsure about.
Read More: Laws on Charge Off Collections
Limitations in British Columbia
In British Columbia, the statute of limitations is six years from the point of inactivity. If the debt has been left completely inactive for more than six years, it is noncollectable.
Limitations in Alberta
In Alberta the statute of limitations is two years from the point of inactivity. However, this can be extended to 10 years if there is a judgment regarding the debt.
Limitations in Ontario
In Ontario, the statute of limitations is two years. However, if the defaulted debt occurred before January 1, 2004, the creditor has up to six years to collect on the debt. Any debt acquired after January 1, 2004, is subject to a statute of limitations of two years.
Federal Limitations
Canada has a federal limitation on debts that extends to all provinces. The maximum time allowed for the collection of a debt is six years. If you do not reside in British Columbia, Ontario, or Alberta, this limit applies to you.