Imagine you lost your job three years ago and fell behind on your credit card payments. As you struggle to put food on the table for your family, you haven’t been able to make a single payment. Now you’re getting calls from collectors and you’re worried they’re going to take you to court.
What should you do?
While receiving collection calls can feel scary and overwhelming, there is no need to panic. Knowing about the statute of limitations on debt in BC can help you make a more informed decision about what to do next.
Here’s what you need to know about British Columbia’s limitation laws.
What is the Statute of Limitations on Debt?
The statute of limitations in British Columbia outlines how long a person or company has to take you to court for a civil claim, including debt collection.
In BC the limitation on debt is typically two years. If you owe your credit card company (or anyone else) money, they have two years from the date of your last payment or written acknowledgement regarding the debt to take you to court.
Understanding the Statute of Limitations on Debt
The statute of limitations on debt is meant to give the lender enough time to get legal advice, review their options, and take legal action against you, the borrower.
The statute is also meant to ensure that lenders act quickly, rather than waiting years to follow up on debts. In BC, the statute of limitations is governed by the Limitation Act.
The two-year limitation period on debt starts:
- The day the last payment was made or
- The last time the debt was acknowledged (written, verbal, or online)
Can the statute of limitations be extended?
There are a few ways that the statute of limitation can be extended. For instance, if prior to the expiration of the 2 year limitation period you::
- Make any debt payment, even partial, will restart the statute for two more years.
- Acknowledge your debt in writing will extend the statute for two more years. This included email communications.
For example, if you can no longer afford to pay your credit card bill starting in August 2025, your creditor has until August 2027 to take you to court. If they fail to do so, they can no longer take legal action against you.
However, if you have some extra money in your budget and decide to make a payment in August of 2026, the statute of limitations will restart for two years. Now your creditor can take legal action until August 2028.
What Debts Are Included in the Two-Year Limitation Period?
In BC, the two-year limitation period generally covers unsecured debts, including:
- Credit card
- Lines of credit
- Personal Loans
- Car Loans
- Cell phone bills
- Utility bills
- Payday loans
Debts Under Laws That Have Their Own Statute of Limitations
Certain government debts have their own set of rules under the Limitations Act and are not included in the 2 year limitation period. Speak to your LIT to find out more. These include:
- Tax debt
- Child support
- Spousal support
- Student loans
- Mortgage
- Court-ordered judgements
What is Statute-Barred Debt?
After two years, when the time limit to take you to court has run out, your debt becomes “statute-barred.” This means you still owe your lender money, but they will no longer be successful if they try to take legal action against you, provided you advise the court that the debt is statute barred.
So, what can they do?
They can continue to take measures to collect the debt, including collection letters, calls, and emails. These can be stressful and hard to ignore but remember, they can no longer take legal action against you to get their money.
Will statute-barred debt affect your credit score?
Yes, having unpaid debt that goes to collections can negatively affect your credit rating for six or seven years. This can make it more difficult and more expensive to borrow money. After six or seven years, negative information will be removed from your credit report.
*Note: A collection agency may try to ‘re-age” the debt by reporting it again after the 6 or 7 year limit expires. If this happens, you then have the task of repeatedly contacting the credit bureaus involved and proving to them that the debts are aged out to have them removed from your file.
Ten-Year Limitation to Enforce or Sue on a Judgement
If you owe money and your lender takes you to court within the first two years and gets a judgement, this gives the lender ten years to enforce it.
A judgement is a legal decision made by the court. In this case, a court judge has determined that you owe the lender money and must pay them back. In this situation, the lender has ten years to collect their money.
Alternatives to the Statute of Limitations on Debt
If you are dealing with older debt and not comfortable waiting out the statute of limitation on debt in BC, speak to a Licensed Insolvency Trustee (LIT) about other debt solutions, including:
Consumer Proposal
In a Consumer Proposal, you work with a LIT to create an offer to pay your creditors a certain percentage of your debt. If your creditors accept, you have up to five years to repay the agreed-upon amount. For many Canadians, a Consumer Proposal is a good alternative to Bankruptcy.
Bankruptcy
If you’re drowning in debt and can no longer pay your bills, filing for Bankruptcy might be your only option. While this is typically the last resort, the purpose of Bankruptcy is to provide honest but unfortunate debtors with a second financial chance. In Bankruptcy, your LIT may sell or cash some of your non-exempt assets, and in exchange, you are relieved from most of your unsecured debts.
Get Debt Help – Speak to a Licensed Insolvency Trustee in BC
If you’re dealing with debt and you don’t know what to do, speak to a Licensed Insolvency Trustee. A LIT will assess your debt situation and recommend a path forward. A Bankruptcy or Consumer Proposal can discharge even Statute Barred debts and stop any legal actions that a creditor or collection agency could attempt in the future. You don’t have to deal with your debt alone. For a free, no-obligation consultation, and to deal with your debt for good, give us a call at 1-888-371-8900, or fill in our online contact form.
