Is There a Statute of Limitations On My Debt (MNP 3 Minute Debt Break)

2024-03-01  3 minute read

Lifestyle Debt


f you have debt and have had it for awhile you might have asked the question.. "Is there a statute of limitations on my debt in Canada?" The short answer? Yes, there is.

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Each province in Canada has its unique statute of limitations governing how long a creditor has to take legal action against you for debt collection. Taking Alberta as an example, under the Limitations Act, a creditor has two key time frames to initiate legal proceedings: within two years from when they first became aware of the debt or ten years after the claim arose, depending on which period ends first.

Imagine sitting at a table, pouring over spreadsheets and charts, trying to navigate your financial future, and wondering about an old debt. If two years have passed since the creditor could have reasonably known about the debt and they haven't sought judgment, you might argue the debt is statute-barred. However, it's not all smooth sailing from there. Creditors can, and often will, attempt to collect by other means, like incessant calling or employing collection agencies, actions which are not restricted by the statute.

A crucial aspect to consider is that a debt can be 'revived' if you acknowledge it or make a partial payment. This can complicate figuring out whether a debt acknowledgment has indeed reset the clock on the statute of limitations.

Interestingly, this principle extends across Canada, with each province setting its rules. Even the Canada Revenue Agency, known for its tenacity in collecting past income tax debts, adheres to a ten-year statute of limitations. This period can be influenced by various factors, such as asset transfers, but generally, ten years is a good rule of thumb.

While this podcast isn't a substitute for legal advice, it does aim to provide clarity on how you might approach creditor collection actions. Remember, the statute of limitations primarily affects the ability to secure a judgment in court; it doesn't silence the collectors or halt their efforts.

If you're grappling with unmanageable debt or the relentless pursuit of collectors, it may be time to seek professional help. MNP Limited offers consultations to explore your options, providing a beacon of hope in navigating turbulent financial waters.

Understanding the statute of limitations on debt in Canada can offer a pathway to better managing or even contesting creditor actions. However, the journey doesn't end with these time limits. If your debt situation feels overwhelming, reaching out for professional guidance can help you find a course towards financial stability and peace of mind.

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