Ontario Debt Collection Laws - AllOntario (2024)

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By Jeffrey Schwartz

If you owe money in Ontario, it’s important to know your rights as a consumer. If you’re unable to repay debt that you owe for whatever reason, a company may send the outstanding debt to a collection agency. The collection agency may threaten you with court or legal action, but there are limitations to what they can say and do. For instance, a collection agency cannot say false or misleading information.

In this article we’ll look at your rights regarding collection agencies, how long a collection agency can collect debt in Ontario, and how to stop collection agency calls.

Your Rights Regarding Collection Agencies

Regardless of whether you owe the money to an Ontario collection agency, you have rights as a consumer. The collection agency cannot harass you. It must follow a strict set of rules set out in the Collection and Debt Settlement Services Act. If you feel that a collection agency has broken the rules, you have every right to file a complaint with the Ministry of Government and Consumer Services.

If a collection agency would like to contact you in Ontario, representatives must send you a private letter by mail or email.

The collections agencies act states that the letter must contain the following information:

How much you owe and the type of credit (i.e. credit card, line of credit, student loan, etc.)
The business or person(s) to whom you owe money
The collection agency that you owe money to, along with its contact information (i.e. mailing address, phone number, fax number and email)
A disclosure statement outlining your rights and the steps you can take if you think the collection agency has overstepped its bounds
Confirmation that the collection agency is registered in Ontario
They must provide a breakdown of the debt you owe upon your request

The collection agency is required to wait six days after they send you the letter before they can make another attempt to collect the debt. Just to clarify, contacting you means the agent has actually spoken with you on the phone. Other ways the collection agency can contact you is by email or voicemail.

However, if you don’t respond to the phone call and the collection agent doesn’t leave a voicemail, that’s not considered contact and the collection agent can attempt to contact you again. Likewise, if the collection agency sends you a letter by regular mail, it’s not considered contact either.

After a collection agency sends you a letter, there are restrictions on who they can contact and when. They can only contact you Monday to Saturday between 7am and 9pm, and on Sunday between 1pm and 5pm.

Furthermore, the collection agency can only contact your friends, spouse, family or neighbours if:

They have guaranteed your debts
The collection agency is attempting to confirm your contact information, or
You’ve provided permission in writing to contact them

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

There is a limit for how long a collection agency can attempt to collect debt in Ontario. There is a statute of limitations for debt collection of two years in Ontario.

Despite this, if you owe money in Ontario and you don’t pay, debt collectors are still allowed to pursue you for money owing to them. Also, if you admit that you owe this money or you make a payment on the principal or interest, the two-year limit clock resets.

Stop Collection Agency Calls

Stopping collection agency calls depends on whether you owe money.

To stop a debt collection agency from calling you if you owe money, you’ll need to either pay off the debt that you owe or contact the collection agency to negotiate a settlement.

If you’re finding it tough to pay off your debts, you might consider reaching out to a credit counselling service for help.

If you’re experiencing a case of mistaken identity and you don’t owe any money, it’s a good idea to find the collection agency’s telephone number and mailing address. Contact the debt collector to let them know you’re not the person they’re looking for.

The collection agency is required to make sure you’re the right person they seek. If you advise the collection agency that you’re not the right person and they keep calling, you might look into filing a complaint.

Summary

When a collection agency contacts you, it may feel like you don’t have any rights, but that’s simply not true. As mentioned above, every consumer has rights all collection agencies must respect and abide by, even if you owe money. A collection agency isn’t allowed to harass your family or you on the phone until you pay it.

About Jeffrey Schwartz

Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT). Consolidated Credit is a national non-profit credit counselling organization that teaches consumers about personal finance through web-based budget and debt analysis tools, financial literacy community outreach programs and in-person or telephone counselling. CAGT is a non-profit association with a mission to provide a dynamic forum in which members can share information and expertise.

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Ontario Debt Collection Laws - AllOntario (2024)

FAQs

What is the Ontario Limitations Act for debt collection? ›

Basic Limitation Period

In Ontario, the basic period is two years for creditors to initiate legal proceedings for debt collection. This period starts when the debt becomes “discoverable,” which is typically when the debtor defaults on their payment obligation.

Read On ›

What is the 7 in 7 rule for collections? ›

Consumers are well-protected when it comes to debt collection. One of the most rigorous rules in their favor is the 7-in-7 rule. This rule states that a creditor must not contact the person who owes them money more than seven times within a 7-day period.

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What happens if you never answer a debt collector? ›

If you receive a notice from a debt collector, it's important to respond as soon as possible—even if you do not owe the debt—because otherwise the collector may continue trying to collect the debt, report negative information to credit reporting companies, and even sue you.

Can a collection agency take you to court in Ontario? ›

For example, in Ontario, there is the Collection and Debt Settlement Services Act, which prohibits entities from harassing consumers in order to collect outstanding debts, whether they owe the debt or not. But if you ignore the collection attempts or refuse to make payment arrangements, you may be taken to court.

See Details ›

How long before a debt becomes uncollectible in Ontario Canada? ›

The Statute of Limitations on debt collection in Ontario is legally two years. This is shorter than how long can you be chased for a debt in Canada, according to the federal government.

Find Out More ›

How many years until a debt Cannot be collected? ›

Statute of limitations on debt collection by state

State	Written contract (years)	Oral contract (years)
California	4	2
Colorado	3	3
Connecticut	6	3
Delaware	3	3

16 more rows

Nov 21, 2023

Tell Me More ›

What is the 80 20 rule in collections? ›

The trick is to know how to plan invoice collection. Use the Pareto Principle (80-20 rule); that is, often 20% of your customers will account for 80% of the overall money owed to you.

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What is the 777 rule for regulation F? ›

The 7-in-7 rule: Reg F stipulates that there may be no more than seven (7) calls made by a debt collector to a consumer in a span of seven (7) days.

Explore More ›

Will a debt collector sue me for $500? ›

While every collection agency has a different policy regarding debt lawsuits, you should feel reasonably safe from a legal claim if you owe less than $500 on a debt. However, if you receive a court summons from a collection agency, don't ignore it.

What's the worst a debt collector can do? ›

Debt collectors are limited on when they can call you — typically, between 8 a.m. and 9 p.m. They are not allowed to call you at work. They can't lie or harass you. Debt collectors can't make you pay more than you owe or threaten you with arrest, jail time, property liens or wage garnishment if you don't pay.

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What not to tell a debt collector? ›

Don't provide personal or sensitive financial information

Never give out or confirm personal or sensitive financial information – such as your bank account, credit card, or full Social Security number – unless you know the company or person you are talking with is a real debt collector.

Read The Full Story ›

Why should you never pay a collection agency in Canada? ›

Having a debt with a collection agency account will harm your credit score and can remain on your credit report for years, even if you pay it.

See Details ›

Can a collection agency take money from your bank account in Ontario? ›

Collection agencies can garnish your bank account if they have obtained a court judgment against you. Wage and bank account garnishments are particularly worrisome because they can happen unexpectedly and cause you to default on other planned payments.

Get More Info Here ›

How do I deal with collections in Ontario? ›

Paying your debt once it's with a collection agency

don't send cash.
always get a receipt for any payment you make.
only deal with the debt collector who contacted you to make payments.
don't contact the creditor that lent you money, as this might create confusion.

Sep 27, 2023

Can you dispute a debt if it was sold to a collection agency? ›

Can you dispute a debt if it was sold to a collection agency? Your rights are the same as if you were dealing with the original creditor. If you do not believe you should pay the debt, for example, if a debt is stature barred or prescribed, then you can dispute the debt.

What is the statute of limitations in Ontario? ›

Ultimate Limitation Periods

Because of the variability in the date on which claims may be discovered, the province has set an ultimate limitation period of 15 years. Meaning, even if a claim is only first discovered more than 15 years to the day after the event which lead to it, it cannot be brought before a court.

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What happens if you don't pay debt Ontario? ›

If you stop making payments to a creditor or collection agency, they can sue you for the money you owe. The court will look at factors like the size and age of your debt, how much you make and what assets you own.

What resets the statute of limitations on debt? ›

Making a payment: Making a payment on an old debt, whether in full or part, revives it, essentially restarting the clock on old debt. Agreeing to pay: If you acknowledge that the debt is yours and agree to pay, the statute of limitations on your debt will start over.

Learn More ›

Can I be chased for a 20-year-old debt? ›

The amount of time that a debt collector can legally pursue old debt varies by state and type of debt but can range between three and 20 years. Each state has its own statute of limitations on debt, and after the statute of limitations has expired, a debt collector can no longer sue you in court for repayment.

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