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.
This article is related to basic consumer debts – for information about liabilities due to injury, damages, etc., it is always best to seek direct legal counsel.
In the province of British Columbia, the Limitation Act is the legislation that sets out details for limitation periods. The 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 after:
- The date an unsecured debt was incurred.
- The last payment made against it was made.
- The last provable acknowledgment of the debt by the debtor (person who owes the money).
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 an attempt to get you to pay.
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 (Canada Revenue Agency or student loans)
- Arrears of child or spousal support
- Various other legal claims
Can the two-year Statute of Limitations Period on Debt Restart?
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. If a person makes a payment or a written acknowledgement of the debt outside the limitation period, this does NOT restart the limitation period.
Even if the two-year limit on a debt being collectible has passed, it can still be reflected on (and impact) your credit history and credit score. Most transactions that the credit bureaus consider “negative”, such as bouncing a payment, or a judgment, will be shown on your credit history for seven years.
Can the Statute of Limitations Resolve Debt Problems?
Using the limitation period 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.
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 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.