If you currently have any debt, are having trouble making payments, or just want to be as knowledgeable as possible as a borrower, you should know the limitation periods when collecting a debt. What do we mean by “limitation period”? We mean the period during which a creditor can take legal action against you to collect an outstanding debt. A limitation period essentially requires a creditor to act within a specified period of time and, therefore, prevents them from extending the process for too long. Once a statute of limitations has expired, it becomes much more difficult for a creditor to collect the money you owe them.
What is the limitation period of my debts?
Be aware that not all debts have the same limitation period. In general, prescription periods only apply to consumer transactions where the debt is unsecured, ie a debt that has no collateral or is not guaranteed by a property (a mortgage is an example of a debt secured by a property, so there is no limitation period). In general, you can not, as a debtor, benefit from a limitation period for the following types of debt:
- Debt guarantee
- Debts to the government (including student loans)
- Debts that can not be paid (child support, fines and civil judgments involving fraud).
The first step in determining whether or not you can take advantage of a limitation period on a specific debt is to determine if the debt is eligible. As mentioned, an unsecured debt is eligible and a secured debt is not.
The second step is to determine how long the limitation period of your debt is. The limitation period for consumer transactions generally depends on the province where you live:
- British Columbia = 2 years
- Alberta = 2 years
- Saskatchewan = 2 years
- Manitoba = 6 years
- Ontario = 2 years
- Quebec = 3 years
- New Brunswick = 2 years
- Nova Scotia = 6 years
- Prince Edward Island = 6 years
- Newfoundland and Labrador = 6 years
- The three territories = 6 years
When does a limitation period start?
If you owe unsecured money to a creditor, your limitation period begins on the date you make your last payment. . For example, if you live in Ontario and make a payment to a creditor on April 15, 2016, but do not make any payments after that. Your limitation period begins on April 15, 2016 and ends on April 15, 2018. It is possible to restart your limitation period, either by making a payment or by giving a written acknowledgment of receipt. If you try to wait until the end of your limitation period, then avoid both of these actions, you will not be able to restart a statute of limitations once it has expired.
What happens after the expiration of a limitation period?
This is probably the most important aspect of a statute of limitations: your debt does not magically disappear once the statute of limitations has expired. You still owe money to your creditor, the debt still exists and you are still the debtor. In addition, if the limitation period on your debt has expired, it does not mean that your creditor or your creditor collection agency must stop trying to collect the money you owe them. They can always get in touch with you to finish the repayment of your debt. What happens is that you now have a defense if your creditor tries to sue you. If you use this defense in a lawsuit against you, you will probably win. If you do not use this defense during the trial, you will surely lose and have to repay your creditor.
How to manage your debts
Above all, we believe that consumers should be as informed as possible about the options available to them and their rights and responsibilities as consumers and borrowers. Without a doubt, the best way to manage your debt is to pay it back. We also understand that it’s easier said than done, and often debt can fall out of your control. This sense of helplessness is something we want to prevent you from feeling. We want you to be an informed and informed consumer. Waiting until the end of your limitation period so you do not have to pay back the money you owe should not be your number one action plan. Face your debt head up and ask for help if you need it. If you are confused about the legal implication of a debt and limitation periods, we recommend that you speak with a trustee in bankruptcy insolvency. He will be able to help you determine what your best course of action is and in this way you will be able to deal with your debts and get your finances back on track.