Understanding the Statutes of Limitations

We always remind clients that time is of the essence in debt collection. With each passing month, your prospects of collecting debt diminish significantly. At a certain point, however, you or your collection agency forfeit the right to pursue legal action for the money owed to you. This debt is referred to as “statute barred”. That means the debt can still be reported to credit bureaus and impact the debtor’s credit rating, but you can no longer file a lawsuit to obtain a legal judgment.

In Canada, statutes of limitations (the laws restricting your ability to file a lawsuit) differ from province to province. In most jurisdictions, the limit is only two years after any of the following:

• Date an unsecured debt was incurred
• Most recent payment made against it

Needless to say, it is risky to delay so long in the first place, as the statistical probability of collecting becomes extremely low.

What About Judgments?

In the majority of provinces, a court judgment stands for ten years and can be renewed for another ten. Although this may sound promising initially, consider that there are better strategies than waiting decades to collect a debt. According to Entrepreneur.com, 50 percent of businesses fail within the first five years, so there is a high possibility that a debtor company will fail in the interim.

You are fortunate to have options. Waiting for payment for years should never be among them. A proactive approach to collection is required to expedite the process. Don’t wait any longer. Submit your collection today!