The statute of limitations for debt collection, in both the United States and Canada, is the period of time during which a debt collector or creditor may file a lawsuit against a consumer for an overdue debt. After the statute of limitations expires, the debt becomes “time-barred” and the creditor loses the right to sue for the balance the consumer owes.
In Ontario, the statute of limitations for debt collection is two years. This law was established by the Ontario Limitations Act in 2002. The act states when a plaintiff can initiate a legal claim against an individual for various types of infractions and isn’t restricted to consumer debts.
The Ontario Limitations Act contains exceptions for creditors when an original business contract exists in which the consumer waives his right to a statute of limitations in the event the debt falls into delinquency. In these cases, the creditor may legally pursue the consumer for the full amount of time stipulated in the original contract.
The legal case Ontario Inc. vs. Chorny indicates that the statute of limitations in Ontario begins on the day the consumer’s account first falls into default and not on the day the creditor initially demands payment from the individual.
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.