How can I avoid paying a debt due to the passage of time?
In Ontario, where a consumer has an unsecured consumer debt, the creditor must sue the consumer within two years of the date of last payment, otherwise the creditor might find it very difficult, if not impossible, to recover any monies from the consumer. An Ontario resident can only take advantage of Ontario’s two year statute of limitations to avoid paying a debt to a creditor on unsecured consumer debts. This protection is not available for the following types of debts:
- Secured debt
- Monies owing to the government
- Spousal support and child support obligations
The clock on Ontario’s two-year statute of limitations begins to run on the date of last payment. A consumer can restart the clock during this two-year window by either making a partial payment or making a written acknowledgement of the debt. On the date that the two-year statute of limitations expires the consumer’s financial obligation does not magically disappear. The expiry of the two-year limitation period, however, does provide the consumer with an affirmative defence in the event that the creditor were to sue the consumer.
If a creditor were to sue a consumer after the expiry of Ontario’s two-year statute of limitations the consumer simply has to file a defence pleading the expiry of Ontario’s two-year limitation period and the creditor would lose its lawsuit. Creditors rarely sue consumers on unsecured consumer accounts more than two years after the date of last payment.
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