I want to know how long the statute of limitations is on a debt to a third party who secured a loan that was defaulted on. I am Canadian and the debt was incured here in Canada.

CaptainForest

It will depend on the province.

What province do you live in?

ravenworth

I live in Ontario.

CaptainForest

Statute of Limitations (SOL) for Ontario:

Refer to the Limitations Act, 2002. It came into force on January 1, 2004.

There are a bunch of exceptions, but the main rule is as follows:

You have 2 years to bring a law suit once you discover a problem. So, if you stop paying me May 2004, I have until May 2006 to bring my law suit.

However, there is an ultimate limitation period of 15 years. The max time you have to bring any law suit is 15 years. Let’s say that in May 2008, your lawyer tells you that you could have sued your accountant for the bad work he did for you back in May 2004. While 4 yrs later, your 2 year limitation period start May 2008 – May 2010. But, by May 2019, 15 yrs later, you would have been out of luck.

Exceptions. Collateral has no limitations. If I loan you money in May 2004 to buy a house, and you secure it with the house as collateral. Then in April 2007, you stop paying me. Under the 2 yr rule, I only have until April 2009 to file suit, HOWEVER, since there is collateral involved, I can sue you whenever. I can sue you in April 2030.

There are other exceptions as well.

I hope I interpreted it correct.

Here is the website link for you to reference and read yourself: http://www.stikeman.com/newslett/BaJan04.htm

ravenworth

Thank you for all your help, the link was very informative.

I have a further question though. In this situation, when would a person in this position claim amnisty from the dept, after the two year or fifteen year limit?

CaptainForest

Depends. What kind of debt was it?

Let's say credit card debt. Then, 2 yrs after your lender realizes you aren’t paying. In the case, 2 yrs after the last statement you paid.

A mortgage? Never. Since you have secured collateral on that.

ravenworth

It was a New Ventures business loan that was secured by the Ontario gov., the loan was defaulted and is now owed to the province.

I've heard that if you ackowledge the loan verbally, then the SOL begins again, is that true?

CaptainForest

Yes. I have heard that.

But I would ask, how would they really know? But, assuming everyone is honest, then they might have a shot there. Simple, don't talk to them verbally.

terryg752

Captain Forest :

Apart from Statue of Limitations, would the docrine of laches be of help? I am a law student - though I kinow the theory, I dont know how it would apply!

Terry

hutchijw

Hi Captian

Question regarding Canadian Credit card debt
I have a credit card that I have not paid on in almost 2 years. It's from New Brunswick. Do they also only have 2 years to collect on it? To top all this off, I've moved out of the country also. I was never late on payments until they stopped working with me and started charging me all these fees to pay by phone and what not .... so, I stopped paying them and then my account fell behind.

Thanks,

Hutch