How long do debt collectors try to collect in Canada?

Considering that nearly one-third of Canadians agree that they carry “too much debt”, it’s safe to assume a large portion of Canadians have had to deal with debt collectors and collection agencies at some point. 

If you’re on the receiving end of collection calls right now, you’re probably wondering how long debt collectors can try to collect, and if the calls will ever stop. 

The truth is collectors can pursue consumers indefinitely, until the debt is settled. But, fortunately, there’s more to it than just that. The debt collection process does have limits and learning about them can help you manage your debt.

What are the limits to debt collection in Canada?

It’s hard to imagine limits to debt collection when you’re receiving calls almost every day. But thankfully, Canada has active legislation governing how collection agencies can communicate with debtors. And, the consequences of a collection agency or debt collector ignoring that legislation can be severe. 

Here’s what debt collection agencies cannot do: 

• Charge a late penalty or any other fee on top of the debt you owe.
• Call you on statutory holidays, between 9 p.m. and 7 a.m., or on Sundays before 1 p.m. or after 5 p.m.
• Threaten or intimidate you.
• Communicate with you using abusive language.
• Share your debt information with anyone apart from you or a co-signer on your debt.
• Provide misleading information about your debts.
• Contact your friends, relatives or employers inquiring or sharing any information, apart from confirming your employment status, address and contact information.

Keep in mind that some collection agencies might not follow all the rules. If that’s the case, you can report them to the Financial Consumer Agency of Canada or your provincial Consumer Affairs Office. 

How long can debt collectors try to collect?

The answer is forever—and that is not an exaggeration. Debt collectors can pursue you indefinitely—as long as none of the aforementioned rules are broken. Even if you don’t hear from them for a while, you may not be out of the woods. 

When a debt goes unpaid, creditors (financial institutions, retailers, auto dealers or any person or company you may borrow money from) will sometimes transfer the debt to collections agencies, which will then attempt to recover the unpaid debt. During this time, the debtor can receive numerous collection calls. 

But collection agencies can also pass off debts to other collection agencies. So, while the collection calls can stop for a period of time, once the debt has been transferred to another collection agency, the process to collect can start up again, promising an “indefinite pursuit.”

What does indefinite pursuit look like? It can mean regular letters and phone calls until the debt is settled—we’re talking years. 

So, is there ever relief if you don’t pay the debt down? Collection agencies are bound by law-dictated time limits if they want to take you to court to collect an unpaid debt. 

Can debt collectors take legal action against you? 

The statute of limitations for debts is a set of laws established by each province that stops collection agencies from successfully suing a consumer after a certain amount of time has lapsed since acknowledgement of the debt. This time varies from province to province, though most sit at two or six years.

For example, Ontario’s statute of limitations is two years from the last date of acknowledgement, while in Newfoundland it’s six years. 

However, the “last date of acknowledgment” is open to interpretation, which can make it confusing for both consumers and some experts. For example, some might estimate the clock to start ticking within six months of a last payment. But this isn’t always the case.

Remember: While the statute of limitations on debt protects you from legal action after a certain period, it doesn’t protect you from debt collection calls. You’ll also risk lowering your credit score, making it slow and difficult to build your credit back up.

Additionally, the statute of limitations doesn’t prohibit legal action for all kinds of debt. So, the type of debt can make a difference in whether or not a debt collection agency can take legal action against you, too.  

Exceptions to debt collection limitations

Do provincial statutes of limitations cover all forms of debt? No.

For example, the Government of Manitoba clearly outlines situations where the statute doesn’t apply, including for debts with collateral and owed taxes. 

Here are a few situations where the statute of limitations on debt does not apply, and where debt collectors can pursue legal action even after the limitation period has passed. 

• Secured debt (mortgages, equipment loans, car loans, etc.)
• Student loans
• Government debts (taxes)
• Debts resulting from fraud
• Child or spousal support

What happens when the limitation period passes? 

Some collection agencies and debt collectors continue to threaten debtors with legal action long after the time to do so has passed. 

If an agency attempts to take you to court after the limitation period ends for unsecured debt, here’s what you should do: 

• Inform them. Let the agency know via email (to ensure you have a record of the correspondence) that you’re aware the statute of limitations has passed for your debt. 

• Report them. If the agency persists even after you inform them of the Statute, it’s time to report them. File a complaint with your province’s Consumer Affairs Office. 

How to deal with debt collection agencies

So, how do you deal with those pesky phone calls? If you know you owe money, you’ll eventually need to respond and figure out a payment plan. But you don’t have to do it alone (more on that later). 

Here’s what to do the next time a debt collector calls you:

1. Schedule time. Don’t rush through a debt collection call if you don’t have time. Instead, don’t answer or advise them of a better time to call. 

2. Don’t admit liability. During the beginning stage of collections (meaning, the first few calls), you may not have confirmation that these debts are indeed yours. Or perhaps they don’t know that you do. Don’t confirm you owe these debts until the collector sends you proof. Remember, debt collection calls are sometimes recorded and can be used against you to collect the debt or in court. 

3. Request a written report. Ask the debt collector to mail or email you official details about this debt. You might ask for documentation to confirm the debt is really yours. If you already have this information, you might tell them that you need some time to review the documentation and ask them to call back later. 

4. Make a record of the call. Debt collectors want information, but so do you. Keep a notepad handy to record the following: 
   • Date and time of the call
   • Frequency of calls (including number of days between calls)
   • Caller’s full name and contact number
   • Name and address of collection agency
   • The amount they say you owe
   • The original creditor

5. Don’t share all your personal details. Do not give a debt collector details about your income, assets, family or employment. They might recite personal details from your credit report, but don’t confirm them. Let them know that you’ll await documentation or take time to review and then politely say goodbye. 

6. Keep calm: Debt collectors can record your calls. Remember, those calls might serve as evidence if they pursue legal action against you. As frustrated as you are:
   • Remain calm 
   • Don’t admit to anything until you have consulted a professional, such as a credit counsellor
   • Don’t lose your temper or use aggressive language against the caller

Next steps? Take the time to review your information and decide your course of action. Did the debt collector threaten you or call during a legally prohibited time? If so, consider filing a complaint. 

What if the debt is yours, and you’re unsure how to handle it? 

If you’re dealing with collection calls, seek help from certified credit counsellors. Not-for-profit credit counselling agencies offer free credit counselling services across the country. They can provide various debt-relief options and guidance on next steps. 

So, can debt collection agencies chase you with legal action indefinitely? Not for unsecured debts, but some forms of debt are fair game. As for collection calls? They’ll likely continue until the debt is paid.

This was written by Josie D’Addario, a certified credit counsellor and financial coach with Credit Canada. She is certified under Accredited Financial Counsellor Canada (AFCC) and the Bankruptcy and Insolvency Act (BIA). Credit Canada is Canada’s first and longest-standing credit counselling agency. For more than 50 years, Credit Canada has been helping Canadians lead healthy financial lives, achieve their goals and improve their quality of life through financial education and debt resolution. As a national, non-profit organization Credit Canada has helped thousands become debt-free and achieve financial wellness. If you are struggling with debt, you can contact Credit Canada for free credit counselling services.

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