Limitations Act | Is it true that debts over 2 years old disappear?

Short answer:  No.

The Ontario Limitations Act, in lay-terms, basically says that for most debt, a creditor must start legal proceedings to recover amounts owing within two years of default (within two years of the last payment made).

If a creditor fails to take legal steps (sue) within this time period, then the debt is referred to as being “statute-barred”.

In Ontario, statute-barred debts do not disappear.  They remain as outstanding and the creditor can take steps to try to recover whatever is owing.

They can make collection calls well beyond the two year period.

And the creditor can even try to sue in court to recover the debt.  But the defense that the debt is statute barred would result in the creditor being unsuccessful in court.

The debt can continue to be reported to the credit bureaus well beyond two years as well.

Some people prefer to simply deal with statute-barred debt through a bankruptcy or proposal to finally bring a halt to collection calls and to re-establish their credit rating.

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