Limitation periods in Canada. What You Need to Know.

Limitation periods in Canada

Every Canadian should know the basics when it comes to financial literacy and that includes an understanding of limitation periods; what they are, what types of debts are covered, limitation periods in various provinces, and how to calculate the expiry of a limitation period.

Limitation periods place pressure on creditors who wish to sue you to do so within a particular period of time. After the expiration of this period it is much harder—and often impossible—for a creditor to collect monies from a debtor for an unpaid debt.

Limitation periods typically only apply to consumer transactions where the creditor is an unsecured creditor.  A debtor is not able to take advantage of a limitation period for:

  1. Secured debts.
  2. Monies owing to the government including student loans
  3. Non-dischargeable debt which includes child support and spousal support obligations, fines, and civil judgments involving fraud.

Provincial limitation periods

Limitation periods vary from province to province and every few years a province will change its limitation period.  Over the past twenty years the trend has been for provinces to reduce their limitation period from six years to two years.

From your perspective, the relevant limitation period is the one in the province or territory in which you currently live.

As of January 1, 2016, the limitation periods for consumer transactions is:

  • two years in British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick;
  • three years in Quebec; and
  • six years in the rest of Canada.

A limitation period is like a stopwatch

limitation period

It is very helpful to think of a limitation period like a clock or a stopwatch.  If you owe money to your creditor for a debt then the limitation begins to run on the date of your last payment.

There are two things that a consumer can do to restart the clock on a limitation period if it has not yet expired:

  1. Firstly, the consumer can make a partial payment which serves to restart the clock. This makes sense because the partial payment results in a newer, more current date of last payment.
  2. Furthermore, if a consumer makes a written acknowledgement of a debt then this written acknowledgement will restart the clock on a limitation period.

Once a limitation period has expired, however, it remains expired. There are no actions that you can take that will reset the clock.

What are the consequences of the expiry of a limitation period?

Many Canadians are under the impression that a debt is extinguished—or magically disappears—upon the expiry of a limitation period.  Nothing could be further from the truth.

It’s important to understand that even if the limitation period has expired you still owe the money to your creditor.  What has changed is that now it becomes much tougher for your creditor—as a practical matter—to collect the debt, but the debt still exists.

Once the limitation period has expired the consumer has an “affirmative defense” which he can plead if his creditor were to sue him.  If your creditor sues you after the expiry of a limitation period and you defend the lawsuit pleading the expiry of your province’s limitation period then you will be successful.  If you, however, fail to defend the lawsuit—or fail to plead the expiry of your province’s limitation period in your defense—then your creditor might very well successfully sue you.

As noted earlier, your debt does not magically disappear when the limitation period has expired.  That means that even if the limitation period has expired on your debt it does not necessarily prevent your creditor, or its authorized collection agent, from contacting you—in writing or by telephone—demanding payment of your outstanding account.

Taking advantage of a limitation period

It is possible that you might currently find yourself in no man’s land—where you have not made payments to one or more of your creditors for several months but the limitation period in your province has not yet expired.  If you find yourself in this position one of your options is to wait and see whether or not any of your creditors are going to sue you.

If the limitation period on one of your debts has expired then you will be in a better bargaining position with your creditor should you wish to negotiate a settlement with your creditor.  You could, for example make a one-time settlement offer to your creditor to settle by making a one-time lump sum payment of 20 cents on the dollar—with your offer to be revoked for eternity in 30 days.  This can often be a very effective negotiating strategy.

You should consider speaking to a licensed insolvency trustee (bankruptcy trustee) before you start negotiating settlements because there might be a number of reasons why a consumer proposal is a more optimal solution.  One of the disadvantages of settling your own debt is that you might be able to negotiate a great deal with one creditor only to find some of your other creditors will not offer favourable settlements.  In many instances, a licensed insolvency trustee will be able to get you a better result by simply doing a consumer proposal.  One of the advantages of doing a consumer proposal is that you can save money eliminating debts owing to the government including student loans provided you ceased attending school full time at least seven years ago.

The powerful combination of limitation periods and creditor’s reluctance to sue people

Limitation periods—simply on their own—can potentially be important to a Canadian struggling with unsecured consumer debt.  Most Canadians, including most people providing advice to consumers struggling with consumer debt, fail to appreciate the importance of limitation periods combined with a patient “wait-and-see approach” to a person’s debt situation. Theoretically, a consumer might owe thousands of dollars in unsecured consumer debt and if they simply were to wait to see if they were sued before the expiry of a limitation period they might find themselves in a position where the limitation periods expired on all or most of their indebtedness. Sometimes a creditor’s ability to take action will depend upon what they know about your circumstances – whether you have any wages to garnishee for example or assets. That’s why talking to someone like a licensed insolvency trustee about your specific situation if you have significant unpaid debts is always a good idea.

Category: Collection Agencies |

Mar 30, 2016


About Mark Silverthorn

Mark Silverthorn worked 12 years as a collection lawyer for four of the ten largest collection agencies operating in Canada. He is routinely consulted by the media on issues involving consumer debt, the activities of bill collectors, and those holding themselves out as assisting consumers struggling with unsecured debt. He is the Founder of Comprehensive Debt Solutions Inc. Its website is

Join the Conversation

  1. AvatarKatie

    Got a call today for a cell phone debit from 2011 in ontario said I didn’t owe and said isnt that there is a statue on old debt (my friend had an issue a few years ago so we had looked it up) the guy on the phone was yelling about the statute not being an excuse and I said that I did not owe and I had known from a friend and told them that I owe nothing, did I reset the clock?

  2. AvatarJ. Douglas Hoyes

    Hi Katie. No, talking to someone on the phone does not reset the clock. If the debt is past the limitation period for your province, a phone call does not reset the clock.

  3. AvatarPeter

    For a secured debt in Ontario, if the security is seized and sold, and there is still an outstanding balance assessed, does the statue of limitations apply to the remaining debt? Or are there different rules, despite the security having been liquidated.

  4. AvatarTed Michalos

    What you are referring to is the Limitations Act of Ontario. It states that a creditor has two years from the date the existence of a debt was last confirmed to initiate legal action to collect the debt. So, if a secured creditor repossessed your car and failed to contact you for 2 years from that date you could advance the Limitations defence in Court. That means if they sued you after the two years and you had no contact with them during the interval, you would ask the Court to dismiss the action. The Court gets to decide based on the facts presented, if the Limitations Act applies.

  5. AvatarRay C.

    If an expired debt has never been reported to the credit bureaus, can a collection agency /creditor suddenly report the account as a new entry to the debtors credit file as an expired debt? ( ie debt added to credit file after it expired and was never reported prior to expiry)

  6. AvatarJ. Douglas Hoyes

    Hi Ray. Theoretically they could report it as a new debt (even though it isn’t), but that would be very unusual, since they know they would get in trouble and risk losing their collection agency license for doing that, so you probably have nothing to worry about.


    i moved out of an apartment, paid ALL of my utility bills in 2005. Seven years later (2012) a Collection Agency called me demanding payment. I provided them with copies of the original bill stamped “Paid” with the date on it. They said that it wasn’t good enough. I went to the bank and had my records reviewed and it showed a cancelled cheque. I received a copy and emailed it to the creditor. and Collection Agency. I haven’t heard from them until now 2020 requesting payment. what are my options?

  8. AvatarTed Michalos

    If they persist send them a registered (or couriered) letter requiring them to either “cease and desist or proceed to Court”. If after sending the letter they continue to pursue you outside of Court you’ll need to lodge a complaint with the Ministry and/or hire a lawyer to send them notice that you are going to take legal action against them. If they take you to Court be sure to attend and present your evidence. Good luck.

  9. Avatarjames

    Got a letter in the mail saying i owe x amount. I called them and said I have not been with that phone company for years. I asked them when the debt started and he said 4 years ago. I live in Ontario. I said…Isnt the statue of limitations 2 years. he said yes and then said “are you calling transunion a liar?” I said no but im calling you a liar threatening to sue me” then hung up….Did I reset the clock? Sorry for spelling..this ruined my day

  10. AvatarTed Michalos

    Only a Court can determine if you reset the clock. It is reset if you confirm/acknowledge the debt. Do you think what you said confirmed the debt?

  11. AvatarJames Baxter

    Does a person moving to another province change the statute of limitations on debt? Or does the location that the debt was incurred determine where the statute applies to ? For example If a credit card account was opened in Nova Scotia and the last payment was in March 2017… the statute of limitations is 6 years in Nova Scotia which would be March 2023… however.. if a person moved out of the province to Ontario where the statute of limitations is only two years— is person owing debt now under the two year limitation or still the 6 year limitation ?

  12. AvatarTed Michalos

    Good question – if you were being sued in Nova Scotia the Nova Scotia limit will apply. If you were being sued in Ontario then the Ontario limit will apply.

  13. AvatarBrad

    I was current on my minimum credit card payments until the date I missed a payment 2 years ago. Did the clock start running on the limitation in Alberta on the date I made my last payment, or on the subsequent due date that I first missed a payment? I have not made a payment since then and have not acknowledged the debt.

  14. AvatarTed Michalos

    The clock starts from the date you last confirmed the debt – in this case based on what you have said, it was when you made your last payment. Keep in mind the Limitations Act provides a defense in Court if you are sued. You need to respond to the law suit and actively use the Limitations defense – it is not automatically given. Unless you tell the Court the Limitation period has lapsed how will the Court know that?

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