Taking advantage of the expiry of a limitation period on certain debt
July 20th, 2015 by NSS Admin
If you owe monies to an unsecured consumer creditor and that creditor does not sue you before the expiry of the relevant limitation period on certain debt in your province then you will be in a position where you can choose not to pay a penny to that creditor. It is important to remember that you cannot take advantage of the expiry of a limitation period to avoid paying any monies in connection with the following categories of debt:
Limitation periods in Canada for simple contract debt
The relevant limitation period is determined by the province in which you live. The limitation period is two years in British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick, three years in Quebec, and six years in the rest of Canada.
It is helpful to think of a limitation period as a clock which begins to run on the date of your last payment with respect to a particular unsecured consumer debt. Prior to the expiry of a limitation period there are two things that a consumer can do to restart the clock on a limitation period. Firstly, a consumer could make a payment prior to the expiry of a limitation period. Secondly, a consumer could make a written acknowledgement of a debt prior to the expiry of a limitation period. Both of these actions effectively restart the clock on a limitation period.
Forfeiting the opportunity to avoid paying a penny on an outstanding debt
In the next section you will learn about nine alternatives to bankruptcy. Most of these alternatives involve making one or more payments to your creditors. It is important for you to realize that if you use any one of the following alternatives to bankruptcy then you are essentially forfeiting the opportunity to avoid paying a penny to your unsecured consumer creditor because of the expiry of a limitation period:
- Making payment in full
- Obtaining a debt consolidation loan
- Making monthly payments
- Credit counselling
- Making a consumer proposal
- Settling your debt