I’ve Been Told A Creditor Cannot Collect On An Old Debt Is This True?
In certain circumstances, this is true. The ability of a creditor to legally pursue collection for an old debt has some limitations by Provincial Law which can vary from province to province. In Alberta, the Limitations Act, in general, prevents a creditor from taking collection action if you have not made any payment towards the debt for 2 years and have not given the creditor a written confirmation that you owe them the debt in the same 2 years. In order to avoid this limitation affecting their claim, the creditor can go to court to obtain a judgement before the 2 years is up and if the court confirms the debt is owing with a judgement, the judgement is good for 10 years. The creditor can use the judgement to attempt to seize sources of income or assets.
In many cases, for small debts, the creditor will not invest the time or expense needed to go to court to obtain a judgement unless they know you have sufficient income or assets that can be seized.
It is not unusual that you may not hear from a creditor for many months and just before the 2 years is up there is a flurry of collection calls/collection letters. This is because the creditor knows the Limitation Act will soon “kick-in”.
To determine if your debts are covered by limitation law or a review of all your options and to discuss what assets are seizable by creditors, make an appointment to see a Licensed Insolvency Trustee in your locality.