Many British Columbia residents who are facing credit and debt problems are unaware that a provincial statute of limitations exists on debt – BC’s Limitation Act. Read on for an overview as to how the statute of limitations on debt works in BC, and some common scenarios when it may be applicable. This focus is related to basic consumer debts – for information about liabilities due to injury, damages, etc it is always best to seek direct legal counsel.
Statute of Limitations on Debt in BC – The Basics:
In the province of British Columbia, Limitation Act is the legislation that sets out details for limitation periods; limitation periods cap the length of time people have to sue for a debt owing, and provide clarity around when liability begins and ends.
BC has a two-year basic liability limitation period, which is two years after:
- The date an unsecured debt was incurred;
- The last payment made against it was made; or
- The last provable acknowledgment of the debt by the debtor (person who owes the money).
What this means is: If it has been two years (or more) since you incurred the debt, made a payment on the debt, or acknowledged the debt – the creditor who is owed the money can no longer take legal action against you, in attempt to get you to pay.
It is important to note that there are exceptions to the two-year limitation period.
- The limitation period varies by province (up to six years in other provinces);
- Not all debts will be subject to this limitation period, such as:
- Civil claims that enforce a monetary judgment;
- Debts owing to government bodies like Canada Revenue Agency or student loans;
- Arrears of child or spousal support;
- Various other legal claims (damages due to sexual assault, title to property, etc).
Can the two-year Statute of Limitations Period on Debt Restart?
People need to be aware that the limitation period is extended if the debt is acknowledged.
- There are two types of acknowledgments:
- If a payment is made on the debt (even if it’s only $1!); and
- If there is a written confirmation of liability
- Includes e-communications.
Either of these acknowledgements will reset the limitation periods. It should also be noted that if a person makes a payment or a written acknowledgement of the debt outside the limitation period, this does NOT restart the limitation period….so timing is crucial.
Credit Impact of “Statute-Barred” Debt
Even if the two-year limit on a debt being collectable has passed, it can still be reflected on (and therefore impact) your credit history and credit score. Most transactions that the credit bureaus consider “negative”, such as bouncing a payment, or a judgment (paid or unpaid) will be shown on your credit history for seven years.
- A debt being bought and sold by collection agencies does not reset the limitations period, nor does a collection agent’s attempts at collecting on the account.
Can the Statute of Limitations be Used to Resolve Debt Problems?
Using the limitation period as a mean to solve a consumer debt problem may be a reasonable debt solution, depending on the person’s specific circumstances.
Individuals who have no income or assets, and do not foresee this changing, may find themselves in a position of being able to “wait out” the two-year period:
- This can be a particularly difficult option, especially if you’re at the beginning of the two-year period;
- Generally, you could expect numerous collection calls and/or correspondence in the meantime;
- If the situation changes (you gain an asset, or income a creditor could seize etc), waiting out the limitation period may not remain a viable debt solution.
Many people find that they have old, or aging debts but they want to wipe the slate clean right away. Other people may find that they’re unable to accurately track when payments were made, or the debts were acknowledged. Others still simply want the creditor contact to stop – waiting out a two-year period can be very difficult and stressful!
A Licensed Insolvency Trustee can help you evaluate all potential debt solution options.
Meet with Sands & Associates today for a free, confidential consultation and find out how we can help you get out of debt.
This content is not intended to be specific legal advice; it is intended to be a simple guide in layman’s language to provide a basic overview only. E. Sands & Associates Inc accepts no responsibility for its use other than as intended. The law is an ever-changing body of statutes and decisions, and the reader is advised to seek legal counsel for specific matters relating to their situation.