How long can debt collectors try to collect in Canada?

Posted on 13 October 2021

Written by Samantha Galea

Struggling with overwhelming debt is a stressful situation in itself – without collection agencies harassing you for their repayments. Collection agencies will often reach out once you have missed a payment or fallen behind on several payments. Both debt collectors and collection agencies are experts in regaining unpaid debts. They will send letters, call you frequently, and turn up at your house, all in the name of trying to claim their money back. You may be fearful to answer your phone or door in order to avoid debt collectors. For this reason, it is understandable that you want to know how long debt collectors can try to collect in Canada. It can become overwhelming quickly, and as soon as you become stressed, it is a good idea to discuss your situation with a Licensed Insolvency Trustee. Being prepared for this type of scenario is essential, as is knowing that there are ways to stop collection agencies from contacting you. So, how long can debt collectors try to collect in Canada?

How long can debt collectors try to collect in Canada?

The reality of the situation is that there is no limit on how long debt collectors can try to collect in Canada. That said, there are various ways to stop collection agencies. Debt collectors only have a time period within which they can reclaim their owed money by threatening legal action. This is primarily applicable to unsecured debts like credit card debt and bills, and not the following:

  • Secured debt, like car loans and mortgages
  • Government debt, like student loans and tax debt (collections by the Canada Revenue Agency are permitted ten years for legal action)
  • Non-dischargeable debt, like child support, spousal support, fines, and fraud related fees

During this time period, debt collectors and collection agencies can pursue legal action against you in order to collect your debt. In most provinces – including Ontario – this is two years, and in the rest of Canada it is six years in line with government legislation. Learn more about when collection agencies give up. Despite this time period, debt collectors can continue to chase up their debts for decades if they wish. Of course, once this time period has passed, they cannot pursue their debt legally and anything they threaten is not reinforced. If you begin to feel that debt collectors are harassing you, you can log a complaint with the consumer protection office. They have rules that debt collectors must comply with. The answer to how long can debt collectors try to collect in Canada is that technically they can collect for forever, but they cannot pursue legal action after six years or less, depending on your province of residence.

What can debt collectors do after the limitation period?

The limitation period for unsecured debts begins on the day of your most recent payment. This is updated should you make any form of payment or even acknowledge collection agencies that the debt is still owed by you. Collection agencies will therefore encourage you to either acknowledge your debt or make a small payment in order to reset the limitation period and give them longer to collect. This is known as ‘re-ageing a debt’. Once a debt is past its limitation period, no legal action can be pursued against you. For this reason, it is important to ensure you have documented the start date of your limitation period, and to know when it ends. Afterwards, collection agencies may still call and send letters demanding money, but any legal action would be an empty threat. For this reason, many debt collectors will stop bothering debtors. Regardless, it is important to know what to say to collection agencies when they call. Any debt will stay on your credit report for seven years since the date of your last payment.

How do you stop debt collectors and collection agencies?

Contrary to popular belief, your unpaid debts will not disappear if you ignore them and do not respond to debt collectors and collection agencies. The fact of the matter is that as long as you have unpaid debt, you will continue to owe the money until it is repaid. For this reason, it is important to address your debt as soon as you realize you are struggling to make repayments. You have a few options when it comes to stopping debt collectors:

  • Wait until the limitation period has passed, by which point creditors can no longer pursue legal action against you – although this will take years
  • Tolerate the debt on your credit report and avoid creditors until the impact of the debt reduces on your report
  • Attempt a debt settlement with your creditors, often using a lump sum of money upfront, and ensure to get a formal receipt of payment
  • Stop debt collectors for good and gain debt relief through a consumer proposal or a bankruptcy

In order to receive a stay of proceedings – which legally prevents creditors from contacting you any more – you will need to file either a consumer proposal or a bankruptcy. Both of these forms of debt relief reduce your debt, addressing the wider issue of your overwhelming debt (including secured debt and government debt). If you are considering either of these options, you will need to speak to a Licensed Insolvency Trustee, the only professionals able to administer these legal forms of debt relief. They can also advise you on other options including debt settlements. At Spergel, you will be assigned your own bankruptcy trustee to assist you through the process, and we have been helping Canadians gain debt relief for over thirty years.

How long does a collection impact your credit report?

If your debt is being chased by a collection agency, it will have an impact on your credit report. A debt logged by a debt collector or a collection agency will stay on your credit report for seven years, regardless of whether it is paid or not. This debt will remain on your credit report from either the date of your last debt payment, or the date you missed a payment, depending on the credit bureau. This date will be reset should you make any payments towards your debt. While you have a debt that is being chased by a debt collector or a collection agency, your credit score will be lowered. This means it can be difficult for you to borrow any more money, including payday loans or a mortgage. After seven years since your last payment date, the debt will no longer appear on your credit report. Should you reach a debt settlement with your creditor, you can ask them to delete your debt as part of your agreement. Learn more about rebuilding your credit report and the best ways in which to do so.

How can Spergel help stop debt collectors?

If you are concerned about how long debt collectors can try to collect in Canada, you are probably struggling with unmanageable debt. If you are being contacted or harassed by debt collectors or collection agencies, there are ways to get them to stop. No matter how severe your financial situation, here at Spergel we can help you. Our experienced Licensed Insolvency Trustees have helped over 100,000 Canadians become debt free. It is not essential to wait for the limitation period to pass – we can help you file a consumer proposal or bankruptcy to clear your debt. We can also ensure a stay of proceedings is in place to legally stop creditors from contacting you. Unlike other debt relief firms, you will be assigned your own bankruptcy trustee to review your financial circumstances and advise you on the best pathway to take from start to finish.

To discuss how to stop debt collectors or collection agencies, book a free consultation with Spergel today. Our reputable Licensed Insolvency Trustees will explain the measures needed to put in place a stay of proceedings to stop creditors hassling you. We can also work with you to reduce your overall debt through various debt relief solutions. Reach out today – you owe it to yourself.


Samantha Galea

Samantha Galea is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) who started working with Spergel as a summer student in 2010. With her socio-political background, Samantha is committed to breaking the stigma associated with bankruptcy so that individuals and families can properly understand all of their options on their path to debt freedom. She is also our resident expert on student debt and collection agencies, as well as the manager of our Brampton office. Outside of work, Samantha is an avid reader of historical non-fiction and world traveler.

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