Statute of Limitations on Credit Card Debt

Question: I paid off a credit card in 2000 after it had been deactivated. A couple of months ago, I started receiving calls from a collection agency about that card. I requested the provide me with information about the account and received nothing. They are now threatening me with small claims court. I have moved several times over the last 8 years and cannot find proof of paying the debt. Is there not a statute of limitations on this sort of stuff?

Statute of Limitations on Debt

It is unfortunately not unusual for someone to receive a collection call about a long forgotten debt. They can even be calling about interest balances that you were not even aware remained on the account or could just be mistaken about the balance. Collectors demand full payment of your debt and even threaten you with a lawsuit. Once you owe a debt, the debt never goes away. The question is whether you have to repay that debt or not. To answer this we need to talk about whether your owe the debt, and if you do the statute of limitations on debt.

A statute of limitations is a period of time that expires after which you cannot be pursued for any matter, in this case an outstanding debt. This protects you, the consumer, from being harassed for debts that have been inactive for several years.

In this situation as you have paid off the debt you are really asking a legal question, and with all legal questions it is best to consult a lawyer for specific advice in your situation.  One lawyer who specializes in both Canadian and American collection law is Mark Silverthorn, who can be reached through the Mark Silverthorn website.

If however the debt might apply to you, here’s what you need to know.

Federal Debt Limitations

Under Canadian statute of limitation law the maximum time that you can be pursued for a debt is 7 years. This law applies in all provinces except British Columbia, Alberta and Ontario. These provinces have their own provincial debt limitation laws.

Debt Limitations in British Columbia

In BC, the statute of limitations on debt is six years from the time the account becomes inactive. If the debt is inactive for six years, as it was in your case, then it is noncollectable.

Debt Limitations in Alberta

Alberta sets the debt limitation period at two years from the last point of activity. If, however, there is a  judgment regarding the debt then this period can be extended up to 10 years.

Debt Limitations in Ontario

In Ontario, the statue of limitations for the collection of debt is two years unless the debt occurred before January 1, 2004.  If the defaulted debt occurred before this date, the creditor can collect on this debt for up to 6 years.

Collection agencies still call outside of the statute of limitation period because they know that most people are unaware of these limits. It is also important to understand that the limits often refer to a period of inactivity. Debt collectors can try to get you to acknowledge this debt, thereby making it active and enabling them to pursue collections against you. When speaking to a debt collector about a debt you have forgotten about or are unsure of, be very careful not to admit that the debt may be yours.

If you are receiving calls from collections agencies, either about current debts or long forgotten debts, it’s important to talk to an expert. Contact one of our licensed trustees in bankruptcy for free, no-obligation advice on what your options might be.

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