Why You Should Never Pay A Collection Agency, Ever

How to pay collection agencies

If you don’t pay your bank loan, credit card, or other debt, the lender may decide to send your file to a collection agency.  A collection agents job is to phone you and take whatever measures they decide are necessary to collect the money.  They want to collect because that’s how they get paid.

If you have the money, you may assume it’s in your best interest to pay them, so they stop calling you and so that it clears up your credit.  Those are logical assumptions, and yes, making the phone calls stop is a worthy objective, but does paying a collection agency “clean up” your credit report?

Not exactly, and that’s why it never makes sense to pay a collection agency. Notice I’m not saying don’t pay off your debt, I’m saying don’t pay a collection agency.  The reason is how you decide to pay off your outstanding debt will affect how long it will remain on your credit report.

To fully explain this somewhat complicated issue I’m going to walk through an example:

You lost your job and stopped paying your credit card and it went to collections. One year after you stopped making payments you were back to work and were able to save (or borrow from family) enough money to pay off the debt.

What should you do?

Scenario #1: You Pay The Collection Agency

The obvious option, since you now have the money, would be to pay the collection agency.  However, according to Equifax, Canada’s largest credit reporting agency, once you pay this debt it will remain on your credit report for six more years from the date of payment, because normal credit transactions remain on your credit report for six years.  Even if the collection agency agrees to accept less than the full amount owing, it’s still on your credit report for six more years.

Scenario #2: You Don’t Pay At All

You could simply not pay the debt.  The collection agency will continue to phone you, and the lender may even decide to take you to court and garnishee your wages, so if they know where you work this may not be a good idea.  However, if they don’t take you to court, the debt is automatically purged from your credit report six years from the last activity, so in the example above that’s five more years from when you stopped paying a year ago.  Oddly enough, by not paying, the debt is actually removed from your credit report one year earlier than if you actually paid the collection agency! Now I don’t really recommend this course of action, I just want to illustrate why paying the collection agency is not necessarily the best choice.

Scenario #3: You Do A Debt Management Plan

If you have the money to pay the debt and want to clear it up, you could go to a not for profit credit counselling agency and arrange a debt management plan.  Typically in a DMP you offer to pay the debt in full over a period of time (say three to five years, by way of monthly payments).  However you have the money available now so you could offer to pay perhaps over 12 months. Once the credit card company agrees to the deal, you simply pay it off.  Here’s the key: Because it was a credit counselling payment, Equifax will automatically purge the debt three years from the date paid.  So, by paying through a not for profit credit counsellor, the debt can be removed from your credit report as much as three years sooner than if you paid the debt through the collection agency.

In the first two examples I have assumed you have paid the debt in full.  (With credit counselling all debts must be paid in full; the collection agency may be willing to accept less than the full amount owing).

Scenario #4: File A Consumer Proposal

If you don’t have the funds in full it’s still not a good idea to settle directly with the collection agency.  A consumer proposal covers all of your standard unsecured debts, so whether or not this is a viable option will depend on what other debts you have, and other factors such as your income and other assets.  However, if a consumer proposal is a viable option for you, you may be able to pay less than the full amount owing, and the proposal is purged from your credit report three years after you make your final proposal payment. Depending on the length of your proposal, this may or may not be sooner than paying directly however again, the benefit here is you are also dealing with all your other debts.

To summarize:

  • If you pay the collection agency directly, the debt is removed from your credit report in six years;
  • If you don’t pay, it’s purged in five years (in this example), but you may be at risk for wage garnishment;
  • Through a not for profit credit counsellor you can pay in full immediately and have the debt removed from your credit report in three years;
  • You can file a consumer proposal and, if you qualify, pay less than the full amount owing and be clear of the debt three years after your final payment.

As you can see, there are really no obvious scenarios where it makes financial sense to pay a collection agency directly.  I’ve illustrated this point with a specific example, and your circumstances may be different, so it would be prudent to consult a financial expert to review your unique situation before deciding on the strategy that’s best for you, but it’s likely that paying the collection agency will not be your best option.

Category: Collection Agencies |

Sep 10, 2014


About J. Douglas Hoyes

J. Douglas Hoyes, BA, CA, CPA, CBV, CIRP is a Licensed Insolvency Trustee and the co-founder of Hoyes, Michalos & Associates Inc., one of Canada's largest independent personal insolvency firms. As an expert in debt management, Doug has been helping people deal with debt for more than 20 years.

Join the Conversation

  1. AvatarK

    What is the debt is 5 years old already? If I paid it now does that mean it will remain for another 6 years on my credit report?

  2. AvatarJ. Douglas Hoyes Post author

    Hi K. Yes, the short answer is debt information remains on your credit report for 6 years from the date of last activity, so if you paid the debt today, the note indicating it was paid would remain for 6 more years. If you did nothing, it is likely that the debt would drop off your credit report in one year.

  3. Avatarkathryn

    My husband and I are in a proposal now the payments are 575 a mth. He past in nov. I can not make the payments on my own right now with no job. If I stop paying the proposal what will happen? Can they take my house?

  4. AvatarHolly

    So just to clear this up, I have collections owing that I have been making payments on slowly. Barley getting rid of it cause of high interest. The debts have been there five years if not closer, if I stop making payments to them now, then after 5 years they will just disappear like they were never there in the first place?

  5. AvatarHolly

    Hello, I would like some feed back on my particular situation. I have collections owing from several years ago when I was just old enough to start my own credit, not knowing how it works and how important it was to maintain good credit, my credit score is in the very low 500’s. I have made payments to several of the debts and the accounts have been closed, like you say they still report on my bureau. There are other open collections currently I believe two of them, that I have been making small payments here and there when I can to keep the collectors at bay, you are saying that if I stopped paying them now after paying them for a while that it would go away sooner then if I pay it? There is one that has a debt litigator emailing me so I am nervous with that one as I don’t want my wages to be garnished. So I think Ill continue to pay that one and settle it. But for my other one would it go away sooner if I stopped paying it? I am 23, I live in Canada Alberta. I have a secured credit card that I always make sure to pay on or before the payment date so that I have a revolving credit that reports good payment history on my bureau and I have a taken out a small loan with Easy-Financial with gross high interest so that I have a Installment credit facility reporting good payment on my bureau, do you think these things will help my beacon score rise? I was paying the credit card for about 8 months with no late payments and my credit score went down? would that be because of the collections? It was 540 when I applied at the credit card and when I checked it 8 months later it was below 500 in the 480’s. I am so confused, I just want to take the right path with my credit so I can buy a home someday. Please share any advise for this situation. Thank you.

    Holly E

  6. AvatarJ. Douglas Hoyes Post author

    Hi Kathryn. You should contact the company that is administering your husband’s proposal. Without knowledge of the terms of the proposal we can’t tell you what may happen to your house, but the proposal administrator should easily be able to answer that question.

  7. AvatarJ. Douglas Hoyes Post author

    Hi Holly. It is standard practice for most credit reporting agencies in Canada to automatically purge most data that is more than six years old, because they don’t want old data cluttering up your credit report. So, if there is a debt that has had no activity for more than six years, it will likely be purged from your credit report. You still owe the money, but it would no longer be reported on your credit report.

    However, if there is any activity, such as you making even a small payment, the “clock” starts over.

    Also, if you stop paying a debt it is possible that the creditor will pursue you for the debt, so there are other factors to consider other than just the impact on your credit report.

  8. AvatarJ. Douglas Hoyes Post author

    Hi Holly. Instead of me trying to determine all of the possible permutations in your situation, I suggest you follow this link to contact an advisor for a no charge initial consultation. They can review all of your debts, and your credit report, and provide you with specific advice to deal with your specific situation.

  9. AvatarEric

    I had a finicial advisor at my bank tell me that the two outstanding debts I “owe” to CBV collection agency would stay on my record permanently, they are from 11/2010 and 09/2010.

    Is she right? Or will they be purged from my account in a matter of months?

    Any info is appreciated, thank you.

  10. AvatarJ. Douglas Hoyes Post author

    Hi Eric. The financial adviser is not correct. Equifax automatically purges most information from your credit report six years after the date of last activity, so a debt with a last activity date of 11/2010 should purge at the end of 11/2016.

  11. AvatarJ

    Why one “purged” mean exactly? Does it mean it’s off my credit bureau or does it mean it till there but creditor can not use it against you?

  12. Avatarab

    I went through some serious financial trouble in 2007-2009 and ended up owing 120,000.00 between Credit Card debt as well as loans and lines of credit…all unsecured.

    I recently generated a copy of my credit file from Equifax(its been 3 years) and low and behold all my derogatory debt bis now been purged except for one small debi that will purge n August of this year. No reported collections appear on my file other than “soft inquiries” from 3 Agencies. I do get calls weekly but have never answered one in the last 2 years.
    Most of the debts show “Date of last activity” between 2008-2010. This means that the statute of limtations has expired on all debts. How can I get the collection calls to stop? And once the last debt purges in August of this year, my credit file will be clean. Can any of these creditors return to haunt me in the future?

  13. AvatarPlaz

    Is there not a way to negotiate with the Collection Agency that they remove your credit listing with Equifax immediately after the balance is paid in full, instead of waiting 6 years?

  14. AvatarJ. Douglas Hoyes Post author

    Hi J. “Purged” means it no longer shows up on your credit report. The debt still exists, so in theory the creditor could attempt to collect it from you (although with the passage of time that becomes increasingly difficult). Once the debt is purged from your credit report it no longer forms part of your credit score, so yes, you are correct that from that point of view it is no longer used against you.

  15. AvatarJ. Douglas Hoyes Post author

    Hi Plaz. The collection agency reports the facts to the credit bureaus, but they don’t control what gets reported. Credit reports show your debts for the last six years, so even if you pay it off, it will still show up as a debt with a zero balance, and the date it was paid (“the last activity date”). I am not aware of a collection agency having the power to remove an old debt from a credit report.

  16. AvatarJ. Douglas Hoyes Post author

    Hi A.B. Assuming your facts are correct at the Limitations period has long expired, and by the end of this year everything will be purged from your credit report, the collection calls will eventually stop. One possible option would be to talk to the collectors and ask them to send you a letter stating the amount owed, with a full statement showing when the money was borrowed. You could tell the collectors that you want that information because you believe that the debts are now past the Limitation period. You could also advise the collectors that regardless, you are not in a position to pay. If the collectors understand that they won’t be able to collect from you, they will probably give up and stop calling.

  17. AvatarJ. Douglas Hoyes Post author

    Hi Darcey. I am not aware of any way to get a credit bureau to remove information from your credit report. Your credit score is an amalgamation of your last six years of activity, so the credit score would be meaningless if old information could be easily eliminated.

    However, since your old debts are now paid, your credit score will improve with the passage of time. To improve it faster, you could obtain new debt, such as a secured credit card, which will build up your credit score.

    There are companies that advertise that they can eliminate old debt and fix your credit report. Unfortunately I am not aware of any such company that is reputable, because only the credit bureaus have the power to alter what they report.

  18. AvatarJ. Douglas Hoyes Post author

    Hi Dean. As you can see from my answers to the previous two questions, I don’t know of any way to get Equifax to remove old information before the purge period. A better strategy is to work on improving your credit score with new credit, and keeping all of your current obligations current, which would have a quicker impact on improving your credit score.

  19. AvatarGreg

    Hi, i have had a debit card and a chequing account on it. Therefore, i went to -2000 $ without having overdraft protection. I paid 400, it got transferred to TCR, so they keep calling me trying to get 1600 back. I talked to their adviser, and he was talking that the time i pay it will remain for 6 years . So how can i go for your scenario 3, so it will last only for 3 years?

  20. Avatarjaydin

    I live in Toronto Canada, and am currently trying to improve my credit score. I co-signed a line of credit many years ago. Two years ago the primary borrower file bankruptcy, now the debt is my responsibility and is sitting with a collection agency for a few years. The debt is 4300@$, 1800$ of that amount is from interest accumulated.
    My question is which is the best method to clearing this debt?
    #1- negotiate a settlement and pay off in one transaction.

    #2- negotiate a settlement and pay off over 4-6 months?

    If I pay it off over a 4-6 month period is it possible for the debt collection company to report the payments to the credit bureau to help boost my credit?

  21. AvatarJ. Douglas Hoyes Post author

    Hi Jaydin. You say that the debt is “sitting with a collection agency for a few years”. How many years? Debts are generally purged from your credit report six years from the date of last activity, so if the debt is five years old, your best option may be to wait one more year and it will purge from your credit report. To find out, get a copy of your credit report from both Equifax and TransUnion to determine the last activity date.

    If that’s not an option, then yes, making a deal to pay them something will result in the debt showing on your credit report as “settled”. That’s not as good as “paid in full on time”, but it’s better than a bad debt. Showing the debt is settled will ultimately restore your credit. There is little difference on your credit report to paying it off in full, or paying it off over 6 months. It’s already a “bad debt”, so unlike a current bank loan where regular payments look good, with a bad debt, the sooner it is dealt with the better.

  22. Avatarjaydin

    Thank You for your speedy reply!

    I should have mentioned, in January the bank took a 150$ out of my account towards this line of credit, without my prior knowledge, otherwise in March, it would have been 6 years since the last payment was made on this account. Does this mean I’d have to wait another 6years for it to be purged from the system, even thoe I personally didn’t make the payment to the account?

  23. AvatarAnonymous

    I moved to the US and I am losing my home in Canada. The Bank and the CMHC will sell my house and probably sue me for the deficiency. I intend to delay dealing with the unpaid debt when and if I return to Canada (file a Bankruptcy) but won’t do anything as long as I live in the US. Does that sound like a good plan?

  24. AvatarJordan

    I have debt from a cable company and its from 2013 or 2012 if I don’t pay it is this article saying that in 5 years it will basically be “wrote off” so there’s no point in paying it ? I got the amount I owe reduced from 1000 to 500, so I was just going to pay it off.. not sure what to do if it’s still on my credit score and I can’t get a credit card anyways..

  25. AvatarJ. Douglas Hoyes Post author

    Yes, if you have no money to pay, and there are no Canadian assets to take, your only choice is to delay until you return to deal with it.

  26. AvatarJ. Douglas Hoyes Post author

    Hi Jordan. Yes, once the limitation period expires, it is difficult for the creditor to sue you. However, the debt may still appear on your credit report. So, if the debt is only $500 and you can afford to pay it, and you don’t want it to appear on your credit report, and you don’t have a lot of other debts, then paying it may help you improve your credit.

  27. AvatarMJJ

    If I have a debt owing of $450 and the collections have finally stop calling after a year then send me out a settlement of a 1 time payment of $276. Should I just pay the $276 or just wait longer? Will my credit score increase if I pay it off or will I still have to wait 4.5 years for my score to increase?

    Thanks MJJ

  28. AvatarKen M.

    Hi. My yearly Consumer Disclosure from Transunion shows a collection agency is making frequent Account Review Inquiries. I don’t owe anything, so is this usual? Should I try to get them to stop? Does it affect my credit in any way?

  29. AvatarNikki

    What if a collection agency keeps reporting to Equifax every month that I owe since 2012, would this mean that 6 years would never happen for me, it would be never ending?

  30. AvatarGayle

    I checked my credit score and there is a public record with the date of July 2011 that is unpaid. How bad will that look when I want to borrow or get a credit card, and will it be purged in 2018?

  31. AvatarMark

    Great article. Years ago I ran into some problems and got behind after a lay off; those debts no longer show up on my file so I presume they were, as you noted purged. But I noticed CBV keeps making a lot of inquiries (sometimes 3-5 a month) even though no debt is listed. This recently caused me to be declined for the first credit I had asked for in years.

    I dont want to contact them for fear that initiating contact will restart the clock – I dont even know what they they are inquiring about. Is there a way to get them to stop?

  32. AvatarJan

    Hi there i have a debt in collections with td bank for around 17000 that was last reported in December 2015. It’s now may 2017 almost a yr n half later. Does this mean purge will happen around dec 2021? I was in a accident where I was injured n unavailable to work at the time. I am looking to have this debt somewhat corrected so that my credit file doesn’t look so dismal. My question is do I even bother to go to the creditor or do a CP or go to a not for profit counselor seeing that this loan will start activation this year giving it another 3 yrs to 2020? What’s a year? Or it does matter to show the effort ? Im guessing the score will go up with that three years of waiting I’m now sitting at 694 with transu and 637 with exquifax. My only other revolving cred is a cap1 always paid n up to date. Got in april 2015 at 522 credit score with 2500 cred limit. Paying on time has gotten me to 694. But right now with this debt I now know that no other creditors will even consider me with this debt for credit. Advice pls?

  33. AvatarTJP

    Would anyone know if debt from Saskatchewan or credit history from Saskatchewan would affect me in BC or is if you get debt in Saskatoon, that means you have debt Canada wide.

  34. Avatarcory

    i know this is a long shot but here goes. i waited the 6 yrs.i lost my job in 2011 and then i moved and forgot about it. i went an got a new bank account 2 months ago and they told me i cant get credit because of past debt. so i thought about it and was like its going to be 6yrs soon i should just wait. i applied for my free credit report from both equifax & transunion, i read them and they both say i have no credit history so it was purged.
    my problem is now that i updated my info im getting calls from a collection agency wanting payment for the past credit card that has been purged from my credit. what do i do?

  35. AvatarJ. Douglas Hoyes Post author

    Hi MJJ: Debts remain on your credit report for a minimum of six years from the date of last activity, so if the debt is a year old, you could do nothing and in five years it will disappear. Or you could take the deal and presumably the debt will then show as “settled” on your credit report, which is better than “not paid”. The amount is not huge, but I would expect that settling the debt may slightly increase your credit score over time.

  36. AvatarJ. Douglas Hoyes Post author

    Hi Ken. You could contact the collection agency and ask why they are reviewing your account. It could be that they have you confused with someone else with a similar name. If there inquiries are “soft hits” it won’t impact your credit score (your credit card company probably does a soft hit every few months, so that’s not an issue). If they are doing a full inquiry every month then yes, that will negatively impact your credit score, so you should ask them to stop.

  37. AvatarJ. Douglas Hoyes Post author

    Hi Nikki. No, once the six years has elapsed, the credit reporting agency will no longer report that debt (which in your example, will presumably occur in 2018).

  38. AvatarJ. Douglas Hoyes Post author

    Hi Gayle. Without knowing the exact nature of the debt I can’t give specific advice, but in general, yes, after six years debts no longer appear on your credit report, so it is likely that it will be purged in 2018.

  39. AvatarJ. Douglas Hoyes Post author

    Hi Mark. Contacting them does not restart the clock, so if they are damaging your credit score then your best option is likely to contact them and find out why they are doing checks on you. It’s possible they have you confused with someone else with a similar name, so they may simply correct their records and stop. If not, you could file a complaint with the Ministry of Consumer Services in your province (names vary by province).

  40. AvatarJ. Douglas Hoyes Post author

    Hi Jan. There are two dates that matter.

    First, there is the Limitations period date, which varies from province to province. In Ontario, that period is two years, so the TD Bank has two years to sue you, which in your example presumably means they can sue you up to December 2017.

    Second, the purge date on a credit report is generally six years from the date of last activity, so in your case, yes, the debt will probably no longer appear on your credit report after December 2021.

    You can consult one of our advisors to determine if a consumer proposal or other options would be best in your situation.

  41. AvatarJ. Douglas Hoyes Post author

    Hi TJP. As a general rule, credit agencies include all debts from across Canada, so moving to a different province does not eliminate a debt from your credit report.

  42. AvatarJ. Douglas Hoyes Post author

    Hi Cory. The short answer is that you ask the collection agency to send you a letter giving proof that you owe the money, and that they are authorized to collect it. It’s likely they won’t bother to send you the letter, which should be the end of it. If they do send the letter, then you could call them and advise them that since the debts are long past the limitation period, you will not be paying them. If they sue you (which is highly unlikely), you could show up in court and tell the judge that the debts are very old, and provide proof, and that should be the end of it.

  43. AvatarAd

    I just had a collection agency FDr something call me at work to tell me they that they are working on behalf of CIBC and that I owed them money. I did confirm that they had me on the phone (I don’t know if that means that my debt restarts now). Anyways she fully admitted to me that the debt is from 2011 and that they are the 4 collection agency to own. I guess my questions are a) can they call me at my work (I live in Ontario) b) did my debt restart because I told them they did have the right person on the phone c) because the debt is from 2011 and she fully admitted that on the phone, is there anything they can do against me?… The debt doesn’t show up on my credit burrow but I am scared if they can still sue me and get my wages garnished even though the debt is from 2011.Please help. Thank you

  44. AvatarTed Michalos

    Hi Ad – in answer to your questions:

    a) can they call you at work? Obviously they did. It is generally accepted that a collector can call your employer once to confirm employment. If they actually spoke to you that’s ok – as long as they haven’t called you at work again.

    b) Just confirming that they have reached the party they are looking for is not the same as confirming you owe a debt to CIBC. The call was likely recorded – if you did say something o confirm the debt, “I know I owe CIBC money” that’s different. Think back to what you said…

    c) Ontario has something called the Limitations Act – a creditor has two years from the last time you confirmed the existence of a debt to commence legal action against you or you have a defence in Court that the “time limit” has expired. If they call again, advise them you dispute the existence of any debt and they should either cease and desist or take you to Court.

  45. AvatarSH


    I wanted to know if a collection agency decided to sue or file a judgement against me if I do not pay a debt, would they do that if the debt is less than $2000? Like for example, if the debt is $1400, is it worth it to sue or file a judgement in order to garnish wages?

  46. AvatarTed Michalos

    There really is no way to predict which debts a collection agency will decide to take to Court and which they’ll let slide. You basically take your chances… If they do decide to sue remember they’ll add the cost of collections to the bill so it won’t be for $1,400. It will be $1400 +++.

  47. AvatarJim

    I am an Ontario resident in my late 30’s. After many years of bad credit choices, I’ve turned it around and am finally rebuilding and seeing the benefits. I presently have a credit score of 720 and am looking to buy my 1st home home (I hope) within the next few years. I am excellent with my current bills and current creditors, however:

    The monkey on my back is my previously defaulted OSAP loan from years ago.
    To clarify, that loan (of around $19,000 at the time) went over to a collection agency.
    The loan was evidently split into “Provincial” and “Federal”, so I’ve been actively paying one of them down and should be debt free (with that 1/2) in say 3 yrs. The “other half” (not sure if federal or provincial) is still outstanding at around $8,500 last I’d seen.
    I know this is NEVER going away in terms of it originally being a government student loan, however it is also now with a private collection agency on behalf of them. Any recommendations?
    I’d ideally like to save up on my own and try to settle the $8,500 for half in one-shot.

  48. AvatarTed Michalos

    If you are able to save up a lumpsum and make a deal with the collection agency that should work – just be careful to have the deal documented BEFORE you send them any money… I can’t tell you how many times people have made a deal, sent the money and then the collection agency comes looking for the “rest of the money”. Good luck and I am glad things are generally going so well for you (other than the student debt).

  49. AvatarSam

    Good day, I have a question. Back in 2009 I had a cell phone bill that I did not pay. I never did hear from anyone till 2018 when collection started calling me. They would not tell me what company they were with or what the old bill was about. So I did not give them any info at all as I did not want it to restart. So after they stopped calling I checked my credit report and bam there was a collections on there. Can they post this to my credit report after 10 years. I’m not sure on how to get the proof to get this off my credit report. I don’t use that bank account anymore. So they have no information that I’ve had that bank account. I live in Alberta.

  50. AvatarJ. Douglas Hoyes Post author

    Hi Sam. The short answer is that they can post information to your credit report, however, Equifax and TransUnion typically purge all information over six years old, so if this is a cellphone bill from 10 years ago it should not appear on your credit report.

    I would suggest that you ask the collection agency to send you written notification of the debt. Also, you should contact the credit bureau (they have a dispute resolution form at the back of your credit report if you ordered it from them directly) and ask them to update the last activity date to 2009. Assuming they do that, their system will then purge the information. Hope that helps.

  51. AvatarRocko G

    What about the option of going to the original creditor and paying it directly? The issue I’m having is that they are saying they cannot accept my monies now that the matter is in collections. Shouldn’t I be able to settle with the creditor directly?

  52. AvatarEmil

    Hello. I checked my credit score recently and found out I have a collection dated May 2017 for a Direct Energy bill. I called Direct Energy and found out that I missed a payment on my old account back in December 2013. Are the limitations applied from the moment I missed the payment or from when was reported to credit bureau which is May 2017?
    CBV is mention on that collection so I’m guessing Direct Energy sold the debt to CBV on May 2017. Thank you

  53. AvatarTed Michalos

    The various provincial Limitations Acts create a defence in Court – if sued after the limitation period has expired they are used to have the legal action to collect stopped. I am not aware of any restrictions relating to the reporting of the debts on your credit report. I suspect you are correct, that CBV has purchased an old debt and are now trying to collect. I suggest you send them a registered letter (or courier it so you have proof of receipt) instructing them to cease collections and proceed to Court. Then you may use the Limitations defence to deal with the debt. Sorry, but they are going to make you jump through some hoops…

  54. AvatarTed Michalos

    If the creditor is refusing to accept your payment then I don’t see how you can force them too. I suggest you document your attempts to pay, their refusal, and then inform the collection agency to “take you to Court”. If they do take you to Court then you will be able to show the Court you tried to pay and payment was refused…

  55. AvatarAdam Rudmik

    My fiancé had a small debt on her credit card that she was unaware of before moving to the US. She only found out upon returning to Canada when opening new bank accounts. There was only 2 years left until her credit reset so we just waited it out. Her credit is now perfect, we own a house etc. Recently we have been harassed constantly by a collection agency so we simply blocked their number. Today we received a letter form their ‘legal representatives’ telling us we will be sued if we do not pay. I looked up the law firm online and it has an ‘F’ rating from the Business Consumer Alliance. Am I correct in thinking that these people are just being aggressive and have no legal recourse? It seems a bit odd that they have attempted to come after a nearly decade old debt that has long been scrubbed from her credit.

  56. AvatarTed Michalos

    Look up the Limitations Act – it sets out the statutory periods that old debts may be enforceable. In Ontario, a creditor has 2 years from the last time you confirmed the existence of a debt to sue you – or you may use the Limitations defence in Court.

    Send a registered letter (or have a letter couriered) to the legal representative advising them to “cease and desist” their collection actions and to proceed to Court. Make sure you respond to any Court notices and at the hearing set out the details of the debt and your Limitations defence.

    Likely the collection agency has bought a block of old accounts for $0.02 on the dollar and is simply trying to “shake you down” for an uncollectable debt.

  57. Avatarpeter


    Here’s my situation.

    I have 7000$ owed to Visa, that is now being transferred to a deb collection agency.

    I also have about 500$ owed to Capital One and about 500$ owed to Koodo. Those debts are with a collection agency for about a year.

    Would I be better off paying my debt trough period of say 1-2 years ? (not directly trought the collection agency of course)


    wait 6 years? You say it will be erased from my credit card. However, the debt will still be there. So it would be impossible for me to have a new credit card, having a lease,etc?

  58. AvatarTed Michalos

    Sorry Peter, but we can’t make this decision for you. If you don’t deal with the debt then it will appear on your credit history for 7 years from the date it is last reported by the company you owe the money to. If you have enough “bad” things on your credit report then it may be very difficult to obtain new credit. If you are able to pay off the debt then generally speaking you should -m just watch out for new interest charges that you will be charged while you are making the payments…

  59. AvatarKevin

    I live in B.C Canada and I defaulted on a credit card 10 years ago and since then my old presidents choice balance has been resold several times to new collection agency’s and this latest agency has reported this 10 year old debt to transunion with a default date of February 2019.

    I have some questions:
    1. Can they report very old debt that has long since fallen off my credit report and how long will it stay on my report.
    2. Can they lie and report the default date from 10 years ago as fresh in February 2019
    3. If I negotiate a settlement with this agency will that new info stay on my report for yet 6 or 7more years before it falls off.
    4 If I don’t settle this old debt can my old debt be resold for decades to come and be constantly reported to transunion and of Equifax again and again decades down the road.

  60. AvatarTed Michalos

    It sounds like you should be using the dispute resolution process for credit reports to sort this out. The credit unions report whet their members tell them to report so they’ll lay the blame on the collector… You need to check and see if BC has a Limitations period on debt collections. Likely this debt is no longer collectible due to its age, but you should double check your provincial laws to be sure.

  61. AvatarMH

    I have not made minimum payments for the past 5 months on a credit card. Balance around $10k. I have been contacted by a collection agency and they are threatening to start legal proceedings to collect the full balance with in 5 days. Are they able to start legal proceedings that fast? I want to pay the debt, but I am in a little bit of a cash flow problem, which was the problem. I was able to pay $1k to the collection agency right away. Obviously all they care about is payment in full, but I hope it shows good faith and intentions on my part.
    How do I deal with the collection agency? are the threats real with 5 days notice? Should I pay the collection agency or the credit card company. Do I have any chance of preventing the legal proceedings if I cant come up with the $9k balance in 5 days?

  62. AvatarTed Michalos

    You may be confusing the “start legal proceedings in 5 days” with “completing the legal proceedings in 5 days”. The first is quite possible, the second is not. IT is fairly easy to start legal action, but once started it will follow a specific timetable requiring notice periods, hearings, etc, etc.

    Certainly if you have the ability to pay off the debt before the legal action has been completed the action will stop. Start by confirming with the credit card company that they will no longer accept payment from you. If that is the case then you need to speak to the collection agency to see about a payment plan. They may ask you to “consent” to a judgment as a condition to agreeing to your payment plan. That means if you default on the payment plan they’d have the right to ask the Court to seize your bank account or garnishee your wages.

    If you have other debts as well as this one you may want to speak to a licenced insolvency trustee about all of your debts and the options for dealing with them.

  63. AvatarMichael

    Hello, can someone please advise me on this:
    Just this month in July 2019, I found out virgin mobile has put a charge off/collection charge from 2016 onto my credit report for the first time against a final pay they say I did not pay in 2016. After contacting 4 departments ( all oveseas call centers) credit department, accounts, customer service and collection agency on behalf of bell canada (owns virgin mobile) and multiple hours they all want one thing: for me to pay the $84 and they will provide a “release” letter to give to the credit reporting agencies showing amount has been paid. I read if I send Virgin/collection agency a debt validation letter and then a couple of weeks after send or file with Equifax/Transunion a dispute, the collection may disappear from my report for a short period of time because the collection agencies are not allowed to comment on my file to the credit reporting agencies until their investigation is complete. Is this true? And if so, during this time can I just ask Virgin/bell to simply not report the collection again for an exchange in payment of the charge even if I disagree with it??

  64. AvatarJ. Douglas Hoyes Post author

    Hi Michael. Yes, you can send a letter to the credit reporting agencies advising that you don’t owe the money, and request that Virgin prove that you do, and if you can prove it they will remove it from your credit file. Also, items automatically purge six years from the date of last activity, so if this debt is already 3 years old, by doing nothing it will purge in 3 years. I would start with a dispute resolution with the credit reporting agencies and see if that will solve the problem.

  65. AvatarS

    I owe RBC 8600 for a line of credit and visa , they called today and I made the mistake of talking to them and confirming my identity and my knowledge of the debt . But made no confirmations of payment , just acknowledged that I would like pay off soon . I did not know about the 6 year purge policy , as it has been almost six years having gone to school 202-2013. Do U think I screwed up the possibility of a inactivity purge ?

  66. AvatarTed Michalos

    I see you posted two very similar questions so I went ahead and deleted the first one.

    Have your screwed up? Maybe. If the call was recorded then the transcript will show exactly what each party said and if it ends up in Court, a Judge will decide if you said anything that would restart the 6 year rule. If you intention is to pay off the debt with your insurance settlement (that was info in the other question) then I don’t know that you need to worry about it. If you want a more definitive answer you’ll need to speak to a lawyer in NB for a legal opinion. Sorry, best I can do…

  67. AvatarS

    Thank you i appreciate any and all input , would you advise I avoid further contact ? Unless I’m going to pay it ?

  68. AvatarTed Michalos

    Ignoring the problem won’t make it go away… Just be aware that if they do commence some sort of legal action to recover their money you should carefully consider how (and whether) you respond. Another reader just posted a questions describing how they ignored a $1500 debt that turned into $7600 after the creditor took them to Court. They ignored all of the notices…

  69. AvatarSean

    I have outstanding debt from credit cards that have been sent to two collection agencies. One for 2,424.00$ Which the last activity was made on January, 1st, 2014. And another for the sum of 12,298.00 which the last activity was on July, 1st, 2014. I’m aware of the statue of limitations in my province so I’m not worried about being sued. The question is when will it be removed from my credit history so it can’t be used against me??? Five or six years… reading some the comments left by others are a bit confusing. And when it does get removed from my credit report and I decide then to pay, how will it affect my credit?

  70. AvatarTed Michalos

    The credit reporting agencies in Canada report what their members tell them to report. When a member stops reporting an item it may appear for up to 7 years from the last reported date. So, you need to look at your credit report to see when these debts were last reported (it will show in the report detail for each debt you have) and add 7 years to that date to know when they should drop off your report. If you repay a debt that has dropped off your report it will only re-appear if the creditor reports the payment to the agency. I know this sounds terribly one-sided in favour of the creditors – that is because it is.

  71. AvatarKerry

    Hi there, I stumbled across this after contacting the collection agencies I owe money to, to update my contact details and get the reference numbers so I can speak to an advisor, I did not pay anything or make any arrangements, they put my accounts on hold for 30 days so that I can get advice. Will this now restart the 6 year period? Fingers crossed not.

  72. AvatarJenny

    Hi, thanks for all the great advice. I have a question. Does the amount you owe matter as to if you might have to got to court? Like would they both taking you to court over a $300 loan or does it not matter at all what the loan amount is? I owe a few smaller sized loans with the biggest total probably being around $365 and I am so scared that if I can’t pay them eventually then I will be taking to court. Any information on any of this you might be able to give me? Thanks in advance.

  73. AvatarJ. Douglas Hoyes Post author

    Hi Kerry. As a general rule, no, the six year period runs from your “last activity”, which is generally accepted to mean “last payment”; updating a phone number is not an activity.

    However, regardless of the rules, any creditor can report to the credit bureaus as they see fit, so it would be wise to regularly check your credit reports to see if the “date of last activity” has changed.

  74. AvatarJ. Douglas Hoyes Post author

    Hi Jenny. It costs money to take someone to court. There is a court fee, lawyer fees, and document costs to serve you with the legal documents. So, it is unlikely that you would be sued for a $300 debt, because the cost of the legal action may be almost as high as the debt itself. Hope that helps.

  75. AvatarPriv

    Question. I keep seeing everywhere the last study day and loan default release date consumer proposal.

    Is that supposed to be last study date of last student loan receiving period.

    I attended a study without a student loan. Last student loan period with study. 1999.

    If I have study period say with 7 years does that kick in this old loan and connect it to study period where there were no loans received. Family helped so I didn’t need student loan but family unwilling to pay old student loan.

  76. AvatarTed Michalos

    Your “end of study” date is set by the National Student Loan Centre. It is supposed to be the last day you were registered as a student. It has nothing to do with the date of your student loans. For example, if you started school in Sept 14 and took out student loans for the first year, but none in the second or third years and then graduated (or stopped going) in May of 2017, your “end of study” date is likely the end of May 2017. That’s when the 7 year exclusion period for eliminating student loans in a consumer proposal or bankruptcy starts. The only way to know your end of study date is to contact the National Student Loan Centre and ask them what it is…

  77. AvatarSteve


    I live in QC and I have a 7000$ debt to Visa that has been transferred to a debt collector about 6 months ago. I’m just wondering how likely I could get sue considering I have no real estate or car and that my salary is not that much . I could try to pay them htrough a consumer proposal but for now I’m still not in a position to do this. Just wondering what are the chances I could get sued in the next two years and a half?

    Also, if ever I would get sued could I still pay them through a consumer proposal at this point?


  78. AvatarJ. Douglas Hoyes Post author

    Hi Steve. Generally a lender won’t sue you for a small amount if they know that you don’t have significant income, but a lawsuit is possible.

    Yes, you could file a consumer proposal, and yes, even if they sue you and get a judgement against you, you can still file a consumer proposal to deal with the debt.

  79. AvatarIvelisse

    Hello, I have a question. The time of limitation begin when you stop making the payment to the company or from the time the collection agency report to credit bureaus?

  80. AvatarJim


    I have a collections agency hounding me for $17k. In effort to clean up my life I have reached out to them and offered $1000 a month to pay it off, which isn’t too long a period of time we can admit when talking finances. They have declined me twice on this generous payment arrangement, as understandably because they want it all at once. Should I just let them sue me for it and in the meantime save the 17k and then when it goes to court have the tapes of the calls subpoeaed that they didn’t want my money and it could have been paid off by the time it reached the courtroom? I’m just frustrated because they made me apply for 2 high interest loans for that amount which of course I got declined for. Income isn’t the issue it’s my credit score. What’s in my best interest here? In your opinion.

  81. AvatarJim

    Me again, you’re a saint for answering everyone on here by the way.

    If it goes to court and you have the money to pay the debt in full anyways, I assume there is no wage garnishment, but does it still go as a judgement or can you just settle the full amount before it’s heard before a judge?

  82. AvatarOdette

    Two years ago, my credit card company charged me $25 for an expedited replacement card, a fee I contested. I continued to pay for my purchases on time, omitting the $25 and the interest fees. I was given the run around for so long I gave up calling them, all the while using the card and paying only for my purchases. I have taken up the battle again, the interest having accrued to almost $1000. I’m still getting the run around. I’ve stopped using the card and wonder what would happen if I just ignored all future bills.

  83. AvatarTed Michalos

    Presumably, at some point the credit card company has to decide to write off the debt or to take you to Court. You may want to check your credit report with Trans Union or Equifax to see how much damage this is doing to your credit history… It may be making quite a mess.

  84. AvatarTed Michalos

    You may settle up to any time before the Court issues a Judgment. Once a Judgment (Order) is issued you may still b]pay the debt off in full to avoid a garnishee, but the Judgment will appear on your credit file. If you decide to settle before a Judgment make sure get them to confirm they will report the fact to your credit bureau (which will start to fix your credit).

  85. AvatarTed Michalos

    Keep in mind that if you allow them to sue you they will add additional interest and the costs of the lawsuit to your bill…

    If the collection agency won’t agree to payment terms, perhaps you should consider a consumer proposal. Likely the credit card company, rather than the collection agency will actually vote and at least this would stop any new interest charges. You may still end up repaying 100% of the debt, but you’d be protected from further action. It is worth considering.

  86. AvatarTed Michalos

    The Limitations Act time line starts when you “last confirmed the existence of the debt”. For most people that is when you made your last payment, but if you have said “yes I know I owe that money” on the phone, or in an e-mail, text or letter then the clock will start then instead.

  87. Avatarshane

    I lost my job in 2012 and defaulted on 3 credit cards(TD, RBC and BMO) with a total of 13000/= And this was when I was in Ontario. I left the county and stayed in UK for a while with my sister and came back after 2014. All 3 cards went in to collection After I stopped paying them in 2012 since I could find work and I couldn’t keep up with the payments. After I came back I moved to Alberta. I applied to secured card after I found employment in AB and I rebuilt my credit and didn’t pay off the one that I owned in Ontario(I know I should have). All 3 collections accounts were fallen off my credit report 2 years ago and my score in at 750+ in both credit reporting agencies. Security funds has been refunded to me on my card and I have limit of 10000 on one card and 5000 on another card. I pay both my credit card balances in full now that I have learned a lesson. I want to buy a house soon and I got my mortgage pre-approved but too scared to move ahead cause I m not sure if the collection companies will reported back my old debt to credit bureau with will mess up the mortgage application. Should I pay this off before going for a house or just leave it ? It’s 8 years old now. I’m stuck in a limbo now. Any advise is greatly appreciated.

  88. AvatarJay

    If the debt is purged from the credit report and after that fact, the collection agency was able to start garnishing, will the garnishment be activity to the point it goes back on your credit for another 6 years or is the garnishment free from being reported?

  89. AvatarDawn

    Hi I recently had a debt collection agency call after my truck had been repo for over 16 years. They want me to send a lump sum or make a few large sum payments. What is the statue of limitation on collecting on a balance and should I pay?

  90. AvatarTed Michalos

    Normally a creditor has 2 years from the date you last confirmed the existance of a debt to commence legal action to recover their money. Of course if they called you and you said, “yes, I owe you that money” the 2 years starts all over again.

    You may want to check your credit report to see if the debt is still listed. It sounds like they bougt an old debt and are now trying to collect whatever they can.

  91. AvatarTed Michalos

    Garnishments are usually reported in the Legal section of your credit report. If the creditor starts reporting the debt again to the credit bureau then it might also re-appear on your report. NOrmally a debt is reported for up to 7 years from the date the creditor last reports it to the bureaus.

  92. AvatarTed Michalos

    It’s anybodies guess what may happen. Likley the only way the debts resurface is if a company buys your old account and tries to recover the money from you. Until/unless that happens you are probably safe. Sorry, there is no way to know if someone will buy your old account.

  93. AvatarBecky

    I uad a bank acct opened 2008 closed 2009. I got a call saying I owe the bank $1800 but they will settle for 900. They said they will take me to court if I don’t pay. Doesn’t the SOL apply here?

  94. AvatarJ. Douglas Hoyes Post author

    Yes, this debt, if it actually exists, appears to be long past the limitations period, so it is highly unlikely they will take you to court. If they do, you can go to court and show the judge how old the debt is, and that should be the end of it.

  95. AvatarPatti f.

    So if one of my credit cards went to collection dnt have to pay it but if they take me to court can I fight it saying I didn’t sign or take a credit card or loan from the individual collection agency there fore I dnt owe them anything am I right??

  96. AvatarJ. Douglas Hoyes Post author

    Hi Patti. Yes, if someone sues you, you can go to court and defend the lawsuit; if you have proof that you don’t owe the money then the judge should throw out the lawsuit, but you would need to prove your case.

  97. AvatarSimon

    Hello J,

    Would like your advice on this situation.
    I’m self employed and about to be a dad soon.
    I have an old credit card debt where the last payment was made in 2015 as it says on the copy of credit card statement I received from a collection agency. Amount is $3000.

    But on my credit report it’s showing that the collection agency started reporting the debt as of 2018, does that mean it’s reset or this is when they received it from another agency / creditor?

    I’m in Canada, Qc, I think the statute of limitation is 3 years, should I be worried about wage garnishing?

    I do not wish to pay them directly due to the ways they’re trying to collect, using fake phone numbers etc… what do you suggest I do in order to settle this and clear it from my credit report. I’m willing to make monthly payments or save until I have a lump sum.

    Much appreciated!

  98. AvatarTed Michalos

    If this is your only debt then likely you have to deal with the collection agency, or do nothing and see if they decide to take you to Court. You are correct, they have 3 years in Quebec to initiate civil action (lawsuit). The question is have you acknowledged/confirmed the existence of the debt since your last payment in 2015? If you haven’t you may want to wait and see if they decide to sue you. If they sue you should appear in Court and explain to the Court the debt dates form 2015. Likely the Court throws it out. Your credit report may be more problematic. The bureaus report what they are told to report. The “new” collection agency may be posting negative reports on your credit history. It will be harder to get them to stop doing that… That’s why some people finally agree to pay something to the collection agency in exchange for clearing the debt and the reporting.

  99. Avatarmarie

    I had a credit card that when I was going through some serious financial hardships back in 2007 I ended up not paying it. Long story short, the collection agency sued me, but never garnished my wages. The date of the judgement was April of 2010. I never paid a dime in the last 13 years, but now I just got served again stating that the collection agency is taking me back to court, how can they do that?

  100. AvatarJ. Douglas Hoyes Post author

    Hi Marie. If they got a judgement against you in 2007, they can pursue you now. If they didn’t get a judgement, it’s likely too late. Assuming you can’t afford a lawyer, you could show the paperwork to a licensed insolvency trustee and they can advise you on your options.

  101. AvatarJoanne Avant

    I have zombie debt of 11 years the collection company called and are going to sue me. I am on a fixed income what options do I have? I may have talked too much on the phone can they hold it against me when i said I could not pay 200 a mo.maybe 25 or 30.

  102. AvatarTed Michalos

    First, due to the state of emergency the Courts are all closed so no one can sue you right now. Second, in order to sue you they will have to prove you owe the debt which means producing some sort of documents beyond a simple purchasing of your old account from someone else. Most provinces have limitation periods that restrict how long a company/person has to sue you once you default on a debt. In Ontario it is 2 years. If you have not confirmed the existence of a debt for 2 years then you have a defence in Court that the Limitation period has expired – the Court will likely throw out the case.

    These old debts are becoming more and more of a problem as companies are buying really old accounts from major lenders and doing what they have done to you. never agree to a payment plan, never agree that you have the debt, make them send them something in writing before you even agree to speak with them further.

  103. AvatarRaymond

    I have a past due amount owed that shows the case was opened Jan 21, 2014 by a collection agency. If after 6 years the case is purged, why does it still reflect on my credit report? It has never went to court for wage garnishment that I am aware of.

  104. AvatarTed Michalos

    I suspect the collection agency has just purchased a block of old accounts and has started reporting your account again to the credit bureau. This is becoming a pretty common problem. It is unlikely they can legally collect on the debt, but they can screw up your credit report trying to convince you to settle with them. It is underhanded, but the laws haven’t caught up with this practice yet. Use the reporting agencies “dispute” process to lodge a complaint and see if they will drop the item.

  105. AvatarHeather M

    Hi there my name is Heather,
    I’ve been working hard to get my credit cleaned up I thought I was going pretty good until a bill I didn’t realize I owed went into collections. The agency flagged my credit account recently and it dropped my score down by 99 points! I was told that this will show bad on my account even after paying. By chance do you know if any of these strategies might also apply in the US? Any advice on how to shorten the amount of time it’ll be there?

  106. AvatarTed Michalos

    Your credit report shows your payment history. The “bad” payment will still show, but it should be followed by a “good” payment when you clear it up. The more “good” postings the quicker your credit score will increase. The Canadian agencies are subsidiaries of the US credit reporting agencies (Equifax and Trans Union) , but I don’t know if they have different policies in the US.

  107. AvatarDanielle Ford

    Does this apply to the uk to?

  108. AvatarDewayne Perkins

    Does the responses apply to Canada related accounts only? I live in Arkansas and i spoke with all three Credit Reporting Agencies (Equifax, Experian and TransUnion) and each stated that adverse/negative items remain on your credit report for seven years. I have several items that are reflecting six years and five months but are still reported on my reports.

  109. AvatarTed Michalos

    I can’t comment on policies for agencies outside of Canada. The rule in Canada is up to 7 years from the date the information was “last reported”. That final phrase is the key. If a creditor is still reporting an old debt every month in their data transfer to Equifax and Trans Union then the 7 year clock probably hasn’t started yet…

  110. AvatarTed Michalos

    Sorry, I have no knowledge of the laws/policies/practices in the UK.

  111. AvatarAmy

    Hi, just got done settling over half of my personal loans from credit cards via collection agencies (for considerably less than the original loan amount). Most of the debts were from about 3-5 years ago and I have only started paying things off this year, I have about 8k left to sort out. One particular debt has gone from the credit card company- we’ll call them Catch Bank- to the collection agency, but recently Catch Bank has been sending me the settlement offers instead of the collection agency. Does it change the effect on my score as if I paid a collection agency or will it count as paying a creditor directly? I will try to settle, would you recommend just paying it on full or is it moot at this point? The Catch Bank card acct has been open for maybe 4 years. My score is sadly below 500 from non-payment. Also, I live in the USA.

  112. AvatarGary Caron

    I asked the Thomas Agency(collection agency) to send me a list of all debts owed. They sent me a list and there are old medical bills from 2011, 2013 and 2014, isn’t there a point when you don’t have to pay those? I wanted to start paying down some of my old medical bills, because theses are what are seriously affecting my credit score. Any suggestions?

  113. AvatarShawna Brubaker

    If ya are now on disability, limited income that has ya living on assistance to insure that ya are able to eat…. absolutely no extra funds in any way, now or the rest of your life. What do ya do when prior to your disability ya had credit card debt in which ya were paying on in a timely manor.!
    I called them all and notified them, i sold belongings to keep making payments till there was nothing left. What do I do? There isn’t even an extra $5 a month at my end! They just keep calling, and they keep suing me. I have nothing to give them.
    Your Advice please???

  114. AvatarShane M Kengich

    I was wondering if I had a car loan that said it was lasted reported back in November of 2015 and says closed. Do I still have to wait another 7 years because its in a collection agency but they jus opened it in March of this year. The original account just said closed not closed/charge off

  115. AvatarCourtney

    What if you are now being sued for unpaid debt? Should you just settle with that agency if possible?

  116. AvatarTed Michalos

    That depends on the merits of the lawsuit. If you don’t want to appear in Court and either argue against the debt and/or suggest repayment terms then certainly try to settle. Once a collection agency has started a lawsuit thought they are less likely to make a deal since they have the added cost of the lawsuit to recover now too.

    Very few people defend against small dollar lawsuits so what happens is the collection agency obtains a Default Judgment against the person. This will allow them to apply for a Writ of Seizure (Writ of Execution). The Writ allows them to garnishee wages, seize bank accounts and register the debt with the Sheriff’s Office.

    If you are served with Court papers make sure you respond within the required timelines…

  117. AvatarTed Michalos

    That will depend on whether the collection agency bought the debt and then starts to report on the status of the debt themselves, or if they are collecting on behalf of the original lender (who has stopped reporting the debt). A debt remains on your report for up to 7 years from the date it is last reported.

  118. AvatarTed Michalos

    If it is a choice between the rent and an old debt then pay the rent. If it is a choice between food and an old credit card buy food. If you are on a disability pension and you stop paying these old debts there is very little that they can do to you. The government will not allow pensions of any kind to be garnisheed. So, switch to a bank you haven’t dealt with before so no one has access to your bank account, then send a letter to these old debts explaining that you are on a disability pension and can’t pay. they may decide to sue you in Court, but again, a Court won’t garnishee your disability pension.

  119. AvatarTed Michalos

    Depending on where you live, there is probably something called a Limitations Act that provides you with a defence in Court against old debts. In Ontario a creditor has 2 years from the last time you confirmed the existence of a debt (by making a payment or saying verbally or in writing that you owe the money) to commence legal action to collect. If more than 2 years have elapsed you have the right to say in Court the Limitations period has expired and that will be the end of it. Unfortunately, you have to appear in Court and make that claim – most people don’t.

    This doesn’t clear the debt so it may appear on your credit report for 7 years from the date it is last reported by the person you owe, but usually a creditor stops reporting after Court.

  120. AvatarTed Michalos

    Sorry, I can’t comment on the US system. This is a Canadian website.

  121. AvatarAaron

    Sorry if this has already been answered above somewhere. I have a repo on my record with a $19k debt on it from 2014 when will this be removed? 2021?

  122. AvatarTed Michalos

    Likely 7 years from the date it was last reported. So if it appeared in 2014 expect it to be dropped in 2021.

  123. AvatarJohn

    My daughter has 3 items on her report, that she has not acknowledged, from 6 to 10 years ago. She is an Alberta resident, so the statutory limit for legal action is 2 years from the date of default.
    When you say these items drop from the report 7 years from the last activity is the report from the collection agency considered an activity? If that’s the case the item would stay on the report for 7 years from the date of the last report and could conceivably remain forever! Is that the case, or is it calculated from the date the debt was last acknowledged?

  124. AvatarTed Michalos

    It is from the last date the item was reported by a creditor or collection agency. If you want to force the issue, have your daughter send a registered letter (or have it couriered) to the creditors requiring them to either take her to Court as she disputes the debt, or to stop reporting it. If they take her to Court make sure she appears and makes the Limitations argument. If she doesn’t then it won’t solve the problem for her.

  125. AvatarMichelle

    I paid 1 $100 dollar debt to centron because that showed up on trans union. It was a medical bill for my minor daughter. They did not give me a paid in full letter because there was a debit that was over 6 yrs old I’m not paying. I owe another $594 to a different collector. This is high impact on my credit score. It too is medical. What is the best way to handle this that will benefit my credit score?

  126. AvatarSam

    When you refer to “Activity” on an account does the activity have to be monetary from the person with the debt? Is selling these debts between debt collection companys considered to be “Activity” ?

  127. AvatarTed Michalos

    Activity is regarded as the person with the debt using the account in an active manner, for example to make a purchase or pay an expense. Interest charges and other fees are not considered activity – these transactions are initiated by the lender.

  128. AvatarTed Michalos

    Pay it, but make sure whomever you are making the payment to will update your credit report to reflect the fact that the debt has been paid. Collection agencies don’t usually report back the original lender when old debts are repaid and if they don’t report the payment it wont; improve your credit report.

  129. AvatarPascale Irvin

    I had a credit card over 10 years ago of $1000 that I was not able to pay back. Its no longer on my credit report and I have perfect scores. Recently I received a letter from a collection agency wanted to settle the payment for $300. Should I pay the agency? If so will it show again on my credit report? Would it be better to pay the lender and not the collection agency?

    Thank you

  130. AvatarTed Michalos

    The Limitations Act likely makes the debt uncollectible. If you respond to the collection agency do not acknowledge the debt, but tell them to go ahead and proceed to Court. If they actually take you to Court make certain you respond and appear in Court to ask for the Limitations defence. Then ask the Court to dismiss the matter and award you your cots for appearing…. Or do nothing at all right now and see what the collection agency does next…

  131. AvatarJoe

    Hello. I recently started a monthly payment plan to two collection agencies. Is it too late to try options 3 or 4?

  132. AvatarTed Michalos

    No, it is not too late to try a debt management program or a consumer proposal. Whether or not either makes sense will depend on the total amount of debt you owe and what your ability to repay the debt is. Those options are certainly worth looking into…

  133. AvatarVicki

    Hello, 12 years ago in University, I opened up a cellphone plan. I didn’t know I had a balance on there and when I left to go back home. I also disconnected the phone. This was in 2008.
    In 2019, I was sent an email saying my Fido Account was bought by National Credit Recovery Inc. and now I owe them money.
    It has been 12 years now and I did not know I owed anything to this account. What do I do? Pay this debt back to this credit agency? I need advise please.

    Original amount owing was $371 and now it’s $502 in 2020.

  134. AvatarTed Michalos

    Likely the Limitations period for enforcing/collecting this debt has long since expired. Don not confirm or otherwise agree that you owe them anything. Send them a registered (or couriered) letter requiring them to “cease and desist or take you to Court”. Likely they leave you alone and go after the next person on their list…

  135. AvatarJesus Carrasco

    Hello great article, seeking out some help. I have an account that’s 4yrs 10months old that I never made any payment on. Will that be removed in 2 months or will it remain for an additional? What would be the best course of action if I was looking into a home loan within the next year, should I pay so it can show on my report as paid or should I just ride it out. Since paying it off won’t change my credit score I assume just wait but will having an I unpaid debt be a deal breaker for the lender or maybe cause a higher interest rate due to that account. I was told loan mostly as based on your credit score.

    Thank you.

  136. AvatarCarrie

    My husband and I have been separated for 3 years, but not legally. We both own the house I live in. I got a call from a mortgage lending company today telling me that I have to remortgage my house to pay off his bill. Which I thought was $2600 but was told it was over 10 thousand. This guy told me if I didn’t remortgage that the lawyers were going to put a lien on my property and charge me interest daily. My question is can they charge me that much interest? Thank you in advance if you know the answer!

  137. AvatarArf

    Anybody please advise.
    I paid my 3 months missed payments of my mobile contract and now I don’t owe them any money. I want to know after how long my credit file will clear this missed payments from the credit file ?


  138. AvatarTed Michalos

    The fact that you have made the acocunt “current” (paid up to date) should show up with the next update to yoru file. The missed payments may actually take a couple of years to clear as most credit reports show your payment history for at least 24 months.

  139. AvatarTed Michalos

    The creditor is talking about getting a Judgment against your ex and then registering a Writ of Execution with the Sheriff. Until the Writ is paid the debt will accrue interest at whatever rate was provided for in the Order, or the orginal terms of the debt. You have to be careful in that the “guy” will say just about anything to get you to pay off the debt.

  140. AvatarTed Michalos

    I suggest you speak to the lender you are likley to use and ask them what difference (if any) dealing with the debt now will make to your approval and interest rate. Then you can decide what makes the most sense – pay it off or let it ride.

  141. AvatarGary P B.

    What if the bill is in collections and they sent me a subpoena but I’m out of work what should I do?

  142. AvatarJ. Douglas Hoyes Post author

    If they are suing you, you could go to court and defend it, although since you owe the money that probably won’t change the outcome. You could also contact them and tell them you are out of work; that may cause them to delay any legal action. Ultimately, if they do sue you and get a judgement against you, they will try to garnishee your wages (which they can’t do if you aren’t working), so if that happens you can probably wait until you are back to work and then decide on a plan (either work out a plan to pay them, or file a consumer proposal or bankruptcy if your debts are too large to deal with on your own).

  143. AvatarTina

    I had a phone bill that went delinquent because I lost my job, the company reported with Equifax after they failed to collect they sent it to a collection agency who tried to collect but didn’t. The 6 yrs passed and the dept was purged. A year later it reappears on my credit report now with a different collection agency asking for the same old dept. This is now over 12 yr old phone bill, over the year I managed to clear up my credit and has a 700 score, this new reporting made my score drop to 530. I know they can try to collect the many but are they allowed to report dept again that’s already fallen off my credit history?

  144. AvatarTed Michalos

    The Limitations Act is a defence in Court – you should dispute the debt at the credit bureau(s) and send a letter requiring the collector to either remove the comments or take you to Court. If they do not you have to decide if it is worth hiring a lawyer to take action against them. This sort of thing is becoming more common and the government needs to sets some clear rules in place to deal with it. Right now agencies are buying old debts for pennies and then extorting payments form people – it is not right, but it is legal.

  145. AvatarB

    So I have a true or false question. I was told that if my debt was sold to collection agency my contract with the original creditor, making me responsible for that debt, is void. I was told this is because my contract was with the original creditor and not the agency. When the debt is sold, the original creditor gets their money from the collection agency and writes it off at taxes, and the collection agency buying it and the collection agency is just trying to get that money back from me. DO you have to pay a collection agency even when the contract wasn’t with them?. I mean You didn’t sign or make any deals with the agency, but with the original creditor, and when they sold that contract, they cancelled it.

    Also is it true that the collection agency has to be licensed in your state to collect a debt?

  146. AvatarTed Michalos

    State? My comments are limited to Canadian collection processes – if you reside outside of Canada you’ll need to look elsewhere.

    Unless your original contract had a clause prohibiting the re-sale of the debt then the fact that a collection agency has purchased it does not invalidate the contract. When a debt is sold the seller is supposed to contact you with notification of who the purchaser was so that you are aware of who you are dealing with. In many cases the notice appears to be sent by the purchaser so you might have a legal defence there, but unless you have actually repaid a debt you should assume you still owe it.

  147. AvatarJo smith

    I am thinking of not paying my electric bill for political reasons (as part of a strike) I have the funds to cover the bill but am worried that if the bill goes to collections it will hurt my credit score. I have two questions. One is if it goes to collections then the strike ends what is the best way to pay it off as far as preserving my credit score. Also, will I get a final warning and chance to pay the bill prior to it going to collections so I can avoid the marks on my credit score?

  148. AvatarDaphanie

    I have a lot of old debt on my credit report that has a zero balance. Can I dispute those and get them removed from my credit report, or will it benefit me to keep those creditors on my report?

  149. AvatarKimmy

    Hello and good day.
    What if the debt was in 2007 or 2008 and it was from a college who gave a loan called perkins, this is in New York City and they gave the collection agency the debt, who is still trying to collect today. Is it still legal to collect on this old college debt or is it past the six year limitations?

  150. AvatarTed Michalos

    The Limitations Act provides you with a defense in Court. If you are sued you have the right to try and prove that the required period has expired as set out in the Limitations Act and if the Court agrees the matter will be dismissed. The Limitations Act does not make it illegal for them to still try and collect. Call it a flaw in the law…

  151. AvatarTed Michalos

    Most accounts remain on your credit report for up to 7 years from the last time they were reported – that’s the tricky part. It can be difficult to tell when the lender last reported you debt. You have the right to challenge anything that appears on your report by using the dispute resolution policies of the different credit bureaus.

  152. AvatarTed Michalos

    I am sorry, but it depends on the electric companies internal policies how they handle old accounts and how much warning you may or may not get. Not paying an account for one month won’t have to dramatic an effect on your credit report. Not paying it for months and moths definitely will. I guess you need to decide how important the political statement you are trying to make is vs your credit rating… Sorry, I know that isn’t terribly helpful

  153. AvatarLisa Pet

    The debt collection company offered me a settlement amount of 50%. How will that look on my credit report? Should I still call the original debt directly?

  154. AvatarL

    Is paying the company directly the debt that has gone to collection better or will this still show for another six years on my credit? I called the company and they said I can pay the amount owed to them or to the collection agency if I preferred.

  155. AvatarL

    A debt used to appear on my credit report from 2014 and this month it suddenly appeared in collections from another collection office but they put the Account Age for 2 years. Can they do this? So the collection office is stating that the debt is two years old when it actually is almost 6 years old. What can I do?

  156. AvatarTed Michalos

    Use the dispute mechanisms on each of the major credit reporting agency’s website to try and correct the reporting. Equifax and Trans Union are the agencies you want to correct.

  157. AvatarTed Michalos

    Just make sure whomever you pay updates the reporting on your credit report. Once a company stops updating your file, the last thing they report to the bureau may remain on your credit report for up to 7 years. So showing that you repaid the debt is a good thing that you want reported.

  158. AvatarTed Michalos

    Part of your agreement to pay should include asking them how it will be reported/reflected on your credit report. Normally “settled debts” (debts that aren’t repaid in full) are reported as an R7. If they simply report it as written off they may report it as R9. Both are bad for your report. As a condition of paying ask for something better than R7 or R9.

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