Under Ontario’s Limitations Act, creditors generally only have 2 years from the date you defaulted to sue you in a Toronto court. If a collection agency sues you after this time, you can use the expired limitation period as an absolute defence to have the claim thrown out.
Being served with a lawsuit for an old credit card, personal loan, or unpaid phone bill can be incredibly stressful. Many Toronto residents panic when a process server knocks on their door, assuming they have no choice but to pay the debt immediately.
However, Ontario law strictly protects consumers from being chased through the court system forever. 📍 If a debt is “statute-barred” because too much time has passed, the creditor legally loses their right to force you to pay via the judicial system. Knowing how to properly assert this defence is critical.
Step-by-Step Process in Toronto Small Claims Court
If you are sued in a Toronto courthouse (such as the official Small Claims Court branch located at 47 Sheppard Avenue East, Toronto, ON M2N 5N1), you cannot simply ignore the paperwork, even if the debt is old. Ignoring a claim leads to a default judgment against you. You must actively defend yourself.
Step 1: Determine the Date of Default
The 2-year clock usually starts ticking on the exact day you missed your payment or the day the creditor had the right to demand payment. Review your old bank statements or credit reports to pinpoint this exact date. If more than 24 months have passed, the debt is likely statute-barred.
Step 2: Do Not Acknowledge the Debt
Creditors will often call and try to get you to make a “good faith” payment of even $5, or send an email apologizing for the delay. ⚠ Under Ontario law, making a partial payment or acknowledging the debt in writing completely resets the 2-year limitation clock back to zero. Do not admit to the debt.
Step 3: File a Defence (Form 9A)
You have exactly 20 calendar days to file a Defence form with the court. On this form, you must explicitly state that the claim is “statute-barred under the Limitations Act, 2002.” This is known as pleading an absolute defence. A licensed paralegal can draft this to ensure it is legally sound.
Step 4: Attend the Settlement Conference
Once your Defence is filed, the court will schedule a mandatory Settlement Conference. 🤝 Here, a deputy judge will review the timeline. If the creditor cannot prove you made a payment or acknowledged the debt within the last 2 years, the judge will likely suggest the creditor drop the case or face having it dismissed at trial.
How Much Does it Cost in Toronto?
Defending yourself against an old debt is generally inexpensive compared to paying off a massive collection claim.
| Expense Type | Estimated Cost (CAD) |
|---|---|
| Filing a Defence (Form 9A) | $77 (payable to the court) |
| Paralegal Drafting Fees | $300 – $800 |
| Full Paralegal Representation | $1,000 – $2,500 |
| Paying a Statute-Barred Debt | $0 (if successfully defended) |
- Court Fees: The Ministry of the Attorney General charges a standard $77 fee to file your defence in Small Claims Court in 2026.
- Legal Help: Hiring a paralegal is highly recommended, as collection agencies use experienced litigation lawyers to try and bully unrepresented defendants.
How Long Does the Process Take?
You must act quickly. ⏱ You only have 20 days from the day you are served to file your Defence. Once filed, waiting for a Settlement Conference in Toronto can take 4 to 8 months. If the collection agency refuses to drop the case, getting to a final trial could take 12 to 18 months.
Frequently Asked Questions (FAQ)
Does a statute-barred debt completely disappear?
No. The debt still legally exists, and it may still appear on your Equifax or TransUnion credit report for up to 6 years. The Limitations Act only stops the creditor from using the courts to forcibly collect the money.
Can collection agencies still call me after 2 years?
Yes, they can still call and ask you to pay voluntarily. However, under the Ontario Collection and Debt Settlement Services Act, you can send them a written notice demanding they only communicate with you in writing or through your legal representative.
What if I already made a small payment last week?
If you made a payment, you have unfortunately reset the 2-year limitation period. The creditor now has a fresh 2 years from the date of that recent payment to sue you in court.
Does the 2-year rule apply to student loans or taxes?
No, standard 2-year limitation periods do not apply, but they are not entirely indefinite. For taxes owed to the CRA, the government has a strict 10-year limitation period to collect under section 222 of the Income Tax Act. For student loans, the provincial portion of OSAP has no limitation period in Ontario, but the federal portion (Canada Student Loans) has a strict 6-year limitation period under the Canada Student Financial Assistance Act to initiate a lawsuit, though the government may still offset tax refunds indefinitely.
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