Statute of Limitations in Canada: What You Need to Know to Protect Your Business
Time is critical in debt collection, and delaying action can cost you more than just money—it could cost you your legal rights. In Canada, the statute of limitations determines how long you have to pursue legal action to recover unpaid debts. Missing this window means your debt becomes “statute-barred.” While statute-barred debts can still affect a debtor’s credit rating, you lose the ability to file a lawsuit to secure a legal judgment.
What Is the Statute of Limitations on Debt in Canada?
The statute of limitations varies by province, but in most jurisdictions, creditors or collection agencies have only two years to file a lawsuit for debt recovery. This countdown begins after one of these events:
- The date the unsecured debt was incurred.
- The most recent payment or acknowledgment of the debt.
It’s important to act swiftly. The longer you wait, the lower your chances of recovering the debt. Studies show that the likelihood of successful collection drops significantly as time passes.
The Importance of Acting Within the Statute of Limitations
Once the statute of limitations expires, the debt becomes legally unenforceable in court. However, creditors can still:
- Report the debt to credit bureaus.
- Use non-legal collection strategies to recover funds.
To maximize your chances of recovery, initiating the collection process well before the statute of limitations runs out is essential.
Court Judgments and Their Time Limits
If you successfully obtain a court judgment, the rules differ. In most Canadian provinces:
- A judgment is enforceable for 10 years and can be renewed for another 10 years.
- While this extends your ability to collect, relying on a judgment alone is risky.
Businesses face uncertain futures, with 50% failing within the first five years, according to Entrepreneur.com. Waiting for years to recover debt is rarely a viable option.
Why a Proactive Debt Collection Strategy Matters
Don’t let time run out. The sooner you act, the better your chances of recovering what you’re owed. A proactive approach ensures:
- Faster resolution.
- Fewer resources spent chasing long-overdue payments.
- Increased cash flow for your business.
If you’re facing unpaid debts, don’t wait for time to erode your rights. Submit your collection today, and let our experts help you recover what’s yours before it’s too late.
By optimizing your understanding of statute of limitations laws, you can protect your business and take swift, effective action. Time is money—act now.
