How long can a collection agency collect on a debt in Ontario?

How long can a collection agency collect on a debt in Ontario?


Maxine McCreadie

October 12, 2021 2:05 pm GMT
For many people struggling to repay their debts, a call from collection agencies or debt collectors is just part of everyday life.

Dealing with a debt collector might seem daunting but it’s important to be aware of your rights and your next steps to handle the problem.

There are strict rules that debt collection agencies and debt collectors must abide by – particularly about how long they can make collection attempts.

Why would a debt be passed to a debt collector?

First things first, why would your debt be passed to a debt collector?

If you aren’t able to stay on top of your debt repayments your creditor – the company you owe money to – may pass your debt to a collection agency.

From credit card debt and loans o a wide range of other debts your original creditor may eventually pass your outstanding debt to collection agencies to recoup what is owed.

A collection agency specializes in recovering unpaid debts. If you’re in the red a debt collector may contact you to collect the money you.

The creditor may try to get their money back using various tactics, including:

  • using its own debt collection department
  • hiring a debt collection agency to work on its behalf
  • selling your debt to a collection agency

What happens when debt is sent to a collection agency?

When your debt is passed to a collection agency they will pursue outstanding debts on behalf of your original creditor.

Collection agencies will typically contact you in writing to let you know about the debt that you owe. If you do receive notice that your debt has been passed to a debt collection agency it’s important you check the letter for three things:

  1. the name of the collection agency
  2. the name of the person or business you owe money to – also known as a creditor
  3. the amount of debt owed
You should also contact your creditor as soon as possible in a bid to handle the arrangement before collection agents, or debt collectors, begin to make collection calls.

By contacting the creditor you may be able to make a payment arrangement where you agree to make a partial payment before an attempt to collect.

You may also be able to set up a payment plan and repay what you owe with monthly payments.

Will my credit score be affected?

If your debt is passed to a collection agency it means you have failed to stay on top of payments and your credit score will be negatively affected. Any missed payments will appear on your credit report.

A low credit score can have an impact on your life in a number of ways:

  • You may find it difficult to obtain credit in the future or be faced with a higher interest rate.
  • You may be charged more by insurance companies.
  • You may find it difficult to rent a property in the future or a landlord may charge more for rent.
  • You may find that some employers are reluctant to hire you.
It’s important to remember, however, that a low credit score doesn’t last forever – as long as you seek support.

If you’re struggling with debt you should speak with a credit counselling agency to find support to better manage your debt. Some debt relief options may even allow you to eliminate a percentage of your debt and begin to rebuild your credit score.

What to do if a debt collector calls

A call from a debt collector is always a nerve-wracking experience so it’s important to be prepared.

You should make sure you ask the following questions:

  • the name of the person calling
  • the collection agency the debt collector works for
  • the name of the company the debt collector is collecting for
  • a contact telephone number
  • the total debt owed
  • who you owe it to
  • when you started owing the debt
You should let the debt collector know that you will return their call after you have verified the information they have provided. You should check your bills and bank statements to confirm the debt is yours and the total debt owed is correct.

How long can a collection agency collect on a debt in Ontario?

There is a Statute of Limitations on debt collection in Ontario. This is how long you can be cased by creditors and collection agencies for debt in Canada.

The Stature of Limitations varies in each province but in Ontario is two years. That means if you haven’t paid a debt, the creditor and a collection agency have up to two years to try to take legal action to collect the debt.

It’s important to be aware that if you make any payments towards a debt or acknowledge it in any way this period begins again. You are also required to make an original creditor aware of any changes to your address or telephone number as this can extend the period a debt collector can chase for payment.

While there is a two year limitation period in Ontario, that doesn’t mean that you no longer owe the debt.

The debt will remain on your credit report for at least six years.

If you’re worried about action by a collection agency or are tired of being hassled with debt collection calls, talk to A. Fisher & Associates. Our experienced advisors can advise on all of your debt-relief options, including a consumer proposal managed by licensed insolvency trustees

Maxine McCreadie

Maxine is an accomplished financial writer, known for her expertise in the field of personal insolvency. Having worked in the international insolvency community for a number of years, she has gained a deep understanding of the intricacies of personal finance and the complexities of insolvency processes.

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