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Creditor threatening legal action

I have been making small payments on a private university loan since 2001. The loan was originally for 5,000 and is now almost 10,000. I have missed more than six months of payments and my creditor threatening legal action. I have received a registered letter from the collection agency’s lawyer that threatens to take me to court if I don’t pay off the entirety of my loan in a week. Is it possible for my creditor to take legal action even though my debt is over 7 years old? What’s the best way to handle this situation?

Posted from: British Columbia

One Response to “Creditor threatening legal action”

Gareth Slocombe, Trustee | C.I.R.P | C.A said...

The BC Limitation Act provides that the right to sue for collection of a debt is extinguished if no court action has been taken for a period of 10 years after the debt is incurred. (The Act has recently been amended to a period of 2 years for debts incurred after June 2013.) However, the debt is not extinguished. The creditor can still call and ask for payment even though the right to sue has expired. Clearly, your payments were not making a lot of head way in paying off the debt. Depending on your income and overall debt level, you may wish to consult with a bankruptcy trustee in B.C. to at least get an idea of your options.