Hi, I am Living in US now but used to live in Canada from Jan 2007 to June 2008.

When I left Canada, apparently there was some unpaid amount (Around $150) on my credit card. Since I had left Canada I did not hear anything from the Bank. 2 years later around July 2010 I went to Canada to visit some friends and tried using my card and realized that my card is not working. After that I contacted the bank which notified me that my account has been placed with a debt collection agency for the amount of $550. Now I tried to contact the agency but the number given by my bank was either not accurate or something else was wrong.

Now in July 2011 I get a call from the debt collection agency demanding money. I didn't acknowledge the loan and asked them to provide me with a written letter first. I told them if I owe the money I will pay but I need a proof of that. Now I have got the written letter. Do I fall under the Statute of limitation rules, can the collection agency sue me? Does the Canadian rules allow creditors and collection agencies to contact/sue people living outside of Canada?

Even if you are outside of the SOL the can still try to collect the money for the rest of your life, they just can not sue you. Yes collections can be done anywhere in the world. Your living in the US has no bearing on their ability to sue you.

Thanks for your answer, but since I contacted the bank in July 2010 to check on my account, does it bring me back in the SOL, since my first default would have happened in July/Aug 2008?

around July 2010 I went to Canada to visit some friends and tried using my card and realized that my card is not working.

Your attempt to use the card probably restarted the SOL so its unlikely to be expired. Its also gives you a problem with claiming the debt isn't yours. All that's left is to dispute the balance.

And yes they can sue you.