Loans are a quick source of cash and can be really useful for whenever you need extra money. While some people are fortunate enough to never rack up debt in their lifetime, there are others who need loans to afford a house or a car. It is easy to find affordable loans in today’s marketplace. Getting one should not be an issue, as long as you do your research and have a budget set up for repayment.
The moment you stop making payments and become delinquent, problems will begin to arise. Missed payments will incur you various fees and affect your credit report and rating. Your lender can enlist the services of a debt collection agency to pressure you into paying off your debts. They can even sue you within a certain period of time if you failed to comply with their demands. This interval is called the statute of limitations.
What Is The Statute Of Limitations On Debt In Ontario
It is important that you manage and control your debts. You must never take on more than you can afford and always make it a point to pay regularly. It is all too easy to get caught up with debts after debts that you have no hope of paying. Once your lender decides to sue you in court, the only way to stop them from hounding you is when the statute of limitations ends.
The statutes of limitations prescribes a time frame for the bringing of certain kinds of legal action. In debt collection, it is the amount of time a lender can take before asking the court to force you to pay your debt. The statute of limitations also protects borrowers from lawsuits and court judgments long after the debt has defaulted.
In Canada, the stature of limitations differs from province to province and from territory to territory. Some can range up to six years, like in Manitoba and British Columbia. The statute of limitations on debt in Ontario is two years. This time frame can reset when the debtor makes payment or at least formally acknowledges the debt in question.
What Happens Once The Statute Of Limitations On Ontario Debt Has Passed
The start of your statute of limitations Ontario debt should be clear – it is the last date of the activity in your account. This could be when you last made a payment, entered a payment agreement or acknowledged ownership of your debt. Note that the last date of the activity in your account is different from the last date of the activity for credit reporting purposes.
It is possible to restart the Ontario debt collection statute of limitations. Once there is a new activity in your account, like making payment to your lender, you are back to square one. Think twice before attempting to restart your statute of limitations. You are just giving your debt collectors more time to sue you.
Statutes of limitations do not erase debts. Even if it has passed, the money you owe will not go away. There are only three ways to erase a debt – you pay it, have it cancelled or have it be discharged from bankruptcy. How long can debt collectors try to collect in Canada, then? Even after the statute of limitations, they can still pester you. They just cannot take any legal action.
The statute of limitations Ontario debt collection ensures that creditors or collectors will no longer be using the court to force you to pay the money you owe after the two-year timeframe has passed. Still, there are always some who will dare to break the law. If this happens, show up in court and defend your case. You may also seek the help of a legal professional.
What Are Debt Collection Agencies?
A debt collection agency is a third party business hired by a lender to help get debtors to pay the money they owe. Its sole purpose is to recover overdue or defaulted debts. When a borrower ceases to make payments, creditors can turn over their file over to a collection agency. The agency will then take over the legwork of contacting the debtor.
Debt collection agencies often use aggressive tactics to make borrowers pay. It is not a fun experience being chased by a debt collector. They can be tenacious, even calling your friends and family to get your phone number and address. Of course, there are regulations regarding what they can and cannot do legally. For instance, collectors cannot threaten or harass you.
How Debt Collectors Operate
The debt collection process is pretty straightforward. Debt collection agencies employ common tactics and techniques to get borrowers to pay what they owe. It always starts with sending letters in the mail, informing the debtor that their file has been forwarded to the collector’s office and amount of payable they have to settle.
After several days, the borrower will receive calls from the collector, requesting payment for their debt. During this time, the collector can offer different payment options for the debtor’s outstanding debt. If a debtor refuses to pay up or ignores the calls, collection agencies may try to take legal actions against them.
Debt collectors rely on pressure and on the debtor’s anxiety to be effective. By underlining the consequences of non-payment, they can create a scenario in the borrower’s mind that paying is their least painful option. Knowing what your rights are as a debtor will help you in case you encounter agents with scrupulous practices.
Alternatives To Waiting For The Statute Of Limitations On Debt In Ontario
It is important to keep in mind that relying on the statute of limitations on debt in Ontario will not resolve your current debts or other financial problems. A delinquent debt can harm your credit rating and make it more troublesome to borrow money in the future. This record can stay in your credit report for six to seven years after the default date or last payment.
Instead of waiting for the statute of limitations to pass, there are different alternatives you can use to pay off your debt. If you are having problems managing multiple credit cards, you may opt for a credit card consolidation loan. This loan allows you to combine all those credit card balances into one payment that is more manageable and affordable for you.
When you apply for a credit card debt consolidation loan in Canada, choose one that has a lower interest rate. This way, you are assured that your future payments will actually go towards paying off your debts. To qualify for this type of loan, you need to have a solid credit score. If you have less than average credit score, a bad credit loan may be the better option for you.
Most borrowers experience getting their loan applications denied when their credit history is not long enough or they have no collateral in case of payment default. Late payments that indicate struggle in paying off debts are also red flags for creditors. A bad credit loan is your first step in addressing your financial problems.
Another alternative to waiting for the statute of limitations Ontario debt is using a credit counseling service. Problems with credit can have long-term consequences. Getting your finances in order before things become serious may be your only salvation. Credit counselling experts can draw up a long-term plan that will allow you to get out and stay out of debt.
These experts will determine the best approach for your situation. Usually, this involves negotiating with your lender to offer you lower interest rates and monthly payments. They will analyze your finances, evaluate your income and expenses and come up with the best plan you can start right away.
If counselling is not for you, the last option you may want to consider is applying for a debt consolidation loan. This type of loan allows an individual to borrow a new loan with lower interest rates and use it to pay off their other debts. Debt consolidation loans work by combining your multiple debt payments into a single monthly payment.
Note, however, that not all debts can be combined in a consolidation loan, like car loans and mortgage loans. The criteria for qualification are also very strict. If you are considering a debt consolidation loan as your alternative to waiting for the Ontario debt collection statute of limitations, you will need a very good credit score and reliable security as collateral.
Pay Your Debts and Avoid Any Future Inconvenience
Being sued in court for debt is an experience you will never want to happen to you or your family. The best way to avoid being hounded by debt collecting agencies is to pay on time. If you have insufficient funds and are struggling to make regular payments, talk to your creditor, and work out an agreement that will be easier for you to handle.
Remember that the statute of limitations Ontario debt collection will not eliminate your debt completely. It can only protect you from being taken in court after a period of time. Running away from your debt will only leave a black mark in your credit report, pull down your credit score and make it difficult for you to borrow money again.
Frequently Asked Questions
How long can debt collectors try to collect in Canada?
A debt collector can still pursue you even after the statute of limitations has ended. They just can no longer sue you in court to force you to pay the money you owe them.
Does debt disappear after 7 years in Canada?
Your debt will not magically disappear, even if the stature of limitations is up. The only way to erase a debt is when you pay it or have it cancelled or have it be discharged from bankruptcy.
How long before a debt is written off?
How long it takes before your debt is written off depends a number of factors. In Canada, your record can stay in your credit report for six to seven years after the default date or last payment.