Ontario Debt Collection Laws

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Ontario Debt Collection Laws

Ontario Debt Collection Laws


When your loan is past due for a particular period of time, many lenders (also known as the original creditor) will sell the debt to debt collection companies, while others will try to collect the bill themselves. If the debt was sold to a collection agency, don’t worry too much; these companies are regulated and must obey rules and regulations when attempting to recover money from you. These rules and regulations will differ depending on where you live in Canada. These regulations govern how long debt collectors can legally contact you to collect money in Ontario. These collection companies will contact you via phone, text, email, and letters until the debt is paid in full. If you do not pay, these authorities may take legal action against you.

What Collections in Ontario Can Do

When it comes to debt collection in Ontario, collectors must follow certain rules and regulations. This is known as the Collection and Debt Settlement Services Act or the Ontario Debt Collection Act. This governs how collection agencies can contact you, when they can contact you, and what debtor rights you have.

Contact Procedure

When a collection agency attempts to contact you for the first time, they must use a letter as their first point of contact. This letter must include the following:

The creditor’s name
The amount owed and the original due date
The new balance of current debt
A breakdown of the total amount owed
The name of both the collection agency and the collector
Information on the registration of collecting agencies in Ontario.
A consumer disclosure declaration outlining your collecting rights.
The collecting agency’s contact information, such as phone number and mailing address
After sending this letter with the appropriate information, the collection agent must wait 6 days (including weekends) before contacting you via other means. This normally entails making numerous phone calls as well as calling friends and family to obtain your current contact information. They can even contact your company to validate your work status once.

When They Will Be Able To Contact You

Once a collection agency begins contacting you, they are limited to when they are permitted to do so. They are only allowed to contact you between the hours of 7:00 a.m. and 9:00 p.m., Monday through Saturday. It must be between the hours of 1:00 p.m. and 5:00 p.m. on Sunday. However, they are not permitted to contact you on Stat holidays or more than three times in a seven-day period without your approval. These prohibitions apply not only to collections calls, but to any type of communication, including:

Answered the phone
Messages sent by text
Your Credit Score and Collection Agencies
Collectors can examine your credit score in addition to using different methods to contact you. They can also record the sum you owe on your credit report. This has a negative influence on your credit score and can make it difficult to rebuild your credit in the future.


What Collectors Aren’t Able to Do

The statute not only specifies what collectors are permitted to do, but it also specifies what they are not permitted to do.

They are not permitted to add any additional fees to your debt. They can only try to collect the debt you already owe.
They can’t bother you. This includes language that is threatening, improper, or coercive. They cannot also apply undue or unfair pressure.
They are not permitted to provide inaccurate or misleading information. The information provided by a collection agency or a collector must be correct.
They are not permitted to disclose any of your debt information to friends and family. While they can call these persons to obtain your current contact information, they cannot release any debt information unless you have granted consent or the person is a guarantor who has promised to take on the debt if you are unable to.
They cannot advise a creditor to pursue legal action without first informing you. If they are going to make this advice, they must notify you first.

How Long Can Collection Agencies Collect Debt?

In Ontario, debt collectors have only two years to take legal action against you in order to collect payment. This time period begins when you last paid or acknowledged the debt. That being stated, even if the statute of limitations has expired, you still owe the bill; it does not vanish.

Limitation of Liability

As previously stated, the statute of limitations for a debt in Ontario is two years. Once this period has gone, the collector will be unable to take legal action against you. However, if you acknowledge the debt or make a payment during the two years, the two years begin over from that date.

If you are still inside the two-year term before the statute of limitations has expired, the collector may take legal action as well as other actions. They are able to:

garnish your pay
Take possession of property (Collateral)
Place a lien on your home.
Collection agencies, on the other hand, are obligated to send written notice to the debtor before taking any legal action.

It is crucial to note that the statute of limitations does not apply to all types of debt. These are some instances of these types of debts:

Student loans backed by the government
Child support obligations
Debt Extending Past the Statute of Limitations
Creditors are no longer entitled to pursue legal action after two years. While some may have taken legal action within the two-year period, others will not for a variety of reasons. One of the reasons is that going to court is expensive, and if your debt is less than the cost of going to court, it may not be worth it to them.

Even if the collector is no longer able to collect, you still owe the obligation. This sum remains on your credit report for up to 6 years and will undoubtedly have an impact on your credit score. The only way to avoid this is to contact the agency as soon as they begin contacting you. You might be able to pay it off before the collector reports it to the credit bureaus.

Because the collector is no longer able to collect, they may elect to sell the debt to a different collection agency, who will seek to recover a portion of the money and settle the obligation.


What Happens If a Collection Agency Takes You to Court?

What happens if a debt collection firm decides to take you to court is entirely dependent on how you respond. You must file a defense to the lawsuit once it has been filed. If you do not, the collection agency will automatically win. If you file, you will be assigned a court date.

At that court date, you will either win the case and receive no judgment, or the creditor will.

The collection agency will prevail, and a judgment will be issued. The manner in which this money is collected is determined on whether or not you pay the judgment. If you don’t pay the judgment, the agency might garnish your wages or even sell your house, depending on how much you owe and where you live.

If your collecting debt reaches this point, you should consult with a lawyer and/or a licensed insolvency trustee. They will be able to assist you in either avoiding or preparing for court.

How Long Does an Ontario Judgment Last?

Following the entry of a judgment, the creditor will contact the debtor to discuss payment arrangements. You can then discuss with them a payment schedule and what you can afford to pay. However, even if a judgment debt is paid in full, it will remain on your credit report for approximately 6 years. It will then be removed from your credit record after this time period.

Complaining About A Debt Collector

You can call the agency if you believe a collection agent is not following the Debt and Collection Settlement Services Act. This information should have been included in the initial mail you should have received. You can always look it up on the internet.

If this does not fix the issue, or you are dissatisfied with the resolution, you can submit an official complaint with the Ontario consumer affairs office. If you want to file a complaint about a federally regulated financial institution, you can do so through the Financial Consumer Agency of Canada instead.


How Long Can You Be Legally Pursued for Debt in Canada?

In Canada, the statute of limitations time on debt varies by province. This time will vary depending on where you live.



Province/Territory Statute of Limitations
BC 2
Alberta 2
Saskatchewan 2
Manitoba 6
New Brunswick 6
Newfoundland and Labrador 6
Quebec 3
Ontario 2
Nova Scotia 2
Yukon 6
Prince Edward Island 6
Nunavut 6
Northwest Territories 6



How Long Until Debt in Canada Is Uncollectible?

The statute of limitations where you reside determines how long a debt can be collected. Even if that is no longer the case, the collectors may sell the debt, and other collectors may attempt to settle the obligation. Many people believe that the debt vanishes after 6-7 years, but this is not the case. After this time period, whether it has been paid or not, it just disappears from your credit record. While it is unusual that a collector will attempt to collect a full or partial payment after this time frame, it is still possible. They simply cannot sue you for the debt any more.

How to Deal with a Collection Agency Calling on Your Behalf

If a collection agency attempts to collect debt from you and the debt is not yours, the first thing you should do is notify the collection agency. Then contact the creditor. See if you can determine why you are being summoned for the debt and how to resolve it. You should also check your credit report to determine if the debt is shown there.

A collection agency may also phone you to seek contact information for a friend or family member who owes money. At this point, all they can ask for is a phone number and cannot provide any information about the loan.

Avoiding Collections

Dealing with a collection agency can be quite stressful. Whatever you owe, there are debt relief options you can investigate before your debt goes to collections or after you have been notified of the collections.

Paying off or coping with debt is frequently easier than you think. Debt consolidation is one option to consider. If you’re having trouble managing your credit card debt, there could be a smart opportunity to convert it to a reduced interest rate. This reduces the total length of time it will take to pay off the debt by transforming it into manageable instalments.

A licensed insolvency trustee and/or debt settlement businesses are another possibility. These firms contact your creditors and might help you reduce your debt to make it more bearable. Because portion of your debt is usually written off, it still has an impact on your credit score, but it is far less difficult to deal with than collections.

While not ideal, the final choice is to declare bankruptcy. However, it is best to seek a second opinion before proceeding. When it comes to bankruptcy, there are certain requirements, and the amount of debt that you have ultimately determines your eligibility. Having a lot of debt is normally suggested for this option, but receiving a second opinion will help you examine your financial condition and decide if it’s worth it.


When it comes to debt collection in Ontario, you have more rights than you believe. Debt collectors are limited in how and when they can contact you. They must also tell you in writing about your debt as well as any planned legal action. This provides you, the debtor, time to settle the debt or devise a strategy to deal with it. Depending on where you live, you have between 2 and 6 years before the collector can no longer pursue legal action and try to collect the debt from you. Unless they file a lawsuit within this time frame, the debt may be sold to another collection agency looking for a settlement, but legal action cannot be conducted. If you are contacted by a collection agency, you should consult with a lawyer or a professional insolvency trustee to determine your alternatives and how to best handle the matter.

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