Limitation period of the debt

If you currently have any debt, are having trouble making payments, or are just trying to be as knowledgeable as possible as a borrower, you should know the limitation periods when collecting a debt. What do we mean by “limitation period”? We mean the period during which a creditor can sue you for an unpaid debt. A limitation period essentially requires a creditor to act within a specified period of time and, therefore, prevents them from extending the process for too long. Once a statute of limitations has expired, it becomes much more difficult for a creditor to collect the money you owe them.

What is the limitation period of my debts?

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Know that not all debts have the same limitation period. In general, prescription periods only apply to consumer transactions where the debt is not secured, ie debt that has no collateral or is not guaranteed by the collateral. property (a mortgage is an example of a debt secured by a property, so there is no limitation period). In general, you can not, as a debtor, benefit from a limitation period for the following types of debt:

  • Debt guarantee
  • Debts to the government (including student loans)
  • Debts that can not be paid (child support, fines and civil judgments involving fraud).

The first step in determining whether or not you can take advantage of a limitation period on a specific debt is to determine if the debt is eligible. As mentioned, an unsecured debt is eligible and a secured debt is not.

The second step is to determine how long the limitation period of your debt is. The limitation period for consumer transactions generally depends on the province where you live:

  • British Columbia = 2 years
  • Alberta = 2 years
  • Saskatchewan = 2 years
  • Manitoba = 6 years
  • Ontario = 2 years
  • Quebec = 3 years
  • New Brunswick = 2 years
  • Nova Scotia = 6 years
  • Prince Edward Island = 6 years
  • Newfoundland and Labrador = 6 years
  • The three territories = 6 years

Please note that these are the legal limitation periods from January 2016.

When does a limitation period start?

Image result for startIf you owe unsecured money to a creditor, your limitation period begins on the date you make your last payment. . For example, if you live in Ontario and make a payment to a creditor on April 15, 2016, but do not make any payments after that. Your limitation period begins on April 15, 2016 and ends on April 15, 2018. It is possible to restart your limitation period, either by making a payment or by giving a written acknowledgment of receipt. If you try to wait until the end of your limitation period, then avoid both of these actions, you will not be able to restart a prescription period once it has expired.

What happens after the expiration of a limitation period?

This is probably the most important aspect of a statute of limitations: your debt does not magically disappear once the statute of limitations has expired. You still owe money to your creditor, the debt still exists and you are still the debtor. In addition, if the limitation period on your debt has expired, it does not mean that your creditor or your creditor collection agency must stop trying to collect the money you owe them. They can always get in touch with you to finish the repayment of your debt. What happens is that you now have a defense if your creditor tries to sue you. If you use this defense in a lawsuit against you, you will probably win. If you do not use this defense during the trial, you will surely lose and have to pay back your creditor.

How to manage your debts

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Above all, we believe that consumers should be as informed as possible about the options available to them and their rights and responsibilities as consumers and borrowers. Without a doubt, the best way to manage your debt is to pay it back. We also understand that it’s easier said than done and that often debt can fall out of your control. This feeling of helplessness is something we want to prevent you from feeling. We want you to be an informed and informed consumer. Waiting until the end of your limitation period so you do not have to pay back the money you owe should not be your number one action plan. Face your debt head up and ask for help if you need it. If you are confused about the legal implication of a debt and limitation periods, we recommend that you speak with a trustee in bankruptcy insolvency. He will be able to help you determine what your best course of action is and in this way you will be able to face your debts and get your finances back on track.

Do you want to get out of debt? Here are the gestures and habits to AVOID! | Loans Quebec

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Successfully getting out of debt can sometimes seem like an insurmountable challenge. Before giving up, however, make sure that you are not committing any of these common mistakes.

Ignore the problem

Your problems will still be there tomorrow morning if you do not address them today. You can make arrangements and hide from your creditors; you can send all the letters you want, your debt will always be there as long as it will not be paid.

You have to deal with your debt. You must assume your share of responsibility. Certainly, if a portion of your debt is fraudulent, or if there is a sum that has been added to your debt in error, follow the steps necessary to dispute it. However, if your debt is legitimate and fair, acknowledge that you owe it and create an action plan to settle the account. You will find it surprising how the simple recognition of your responsibilities can alleviate your worries!

Get a consolidation loan with a co-signer

If you are able to make your payments but find it difficult to reduce your balances due to too high interest rates, it’s time to think about a consolidation loan. A lower interest rate will allow you to pay more than just the interest and the minimum due; you will reduce your balances and you will begin to see the end of your debt on the horizon.

If you do not qualify for a consolidation loan on your own, or if you find it difficult to pay even the minimum on your existing loans, it is likely that a consolidation would be too risky – especially for a potential co-signer: if you do not fail to make your payments when they are due, or if you fail to meet the minimum payment, your co-signer’s credit rating will be affected as well as yours, which will affect not only your ability to to borrow, but also to your relationship with your co-signer.

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The outstanding credit account closure will certainly prevent you from making use of it and increase the balances you have to pay, but you will still have the same accumulation of interest and you will still have the same payment obligation. A closed account always accumulates interest charges and always affects your credit rating – especially if you do not make your payments. In addition, the proportion of your credit used versus your available credit is taken into account when evaluating your credit rating, so closing accounts or there is still a credit available do you no service.

But if you do not close your outstanding accounts, it is important not to contribute to the increase of their balances. If you try to pay your creditors, you will not see any progress as long as you keep adding to what you owe. All in all: destroy your cards to remove the temptation to use them, but keep the accounts open to protect your credit.

To think that a credit counselor is absolutely necessaryRelated image

Do not hesitate to formulate your own action plan. Do you have only a few overdue accounts? So call your banks and financial institutions and ask if there is an opportunity to make a payment agreement or if there is an opportunity to lower your interest rates. Most lenders will be happy to find a way to help you if you are sincerely seeking to pay what you owe.

Despite this option, you may decide to use the services of a credit counseling agency. In the past, this remedy would have hurt your credit rating, but things have changed. The new regulations simply state that you are using the services of an agency. That being said, be aware that agencies will often charge you a monthly service fee and that the plan they develop may take several years to complete. It is therefore important to undertake this path with caution.

Thinking it’s easy to declare bankruptcy

Bankruptcy is not easy. Far from it, the path to credit rehabilitation following a bankruptcy is long, complicated and you will have to discuss every detail of your financial life in bankruptcy court. Bankruptcy does not protect you, either, from your mortgage payments, student loans, or any expenses associated with the bankruptcy filing itself. Plus, your credit rating will carry the black mark of your bankruptcy for years.

If you still believe that bankruptcy is a possibility for you, consult a bankruptcy professional immediately. Your financial situation will only get worse if you delay seeking the necessary advice. That being said, it is not an obligation to meet with a bankruptcy lawyer before starting the process, but this consultation will allow you to know what avenues are available to you and to see if the bankruptcy is reasonable in your situation.

Pay your debts with your retirement funds Image result for paying

The temptation to use your retirement fund – an account full of funds that belongs to you – when your creditors knock on the door can be hard to resist, but it is imperative to let it go! That you despair, that you believe you buy peace using these funds to rid your debt, you will despair even more during your retirement when your wool stocking will be empty and that there will be new accounts payable. Your retirement accounts are protected from your creditors, even if you are recovering, even if you pay your salary to pay what you owe. Respect the wisdom of this protection and do not touch it!

Paying your debts takes a sustained commitment and a little courage, but avoiding bad habits and harmful actions to your financial future will help you meet your goal. And when you start seeing real progress, you’ll find yourself more confident and ready to face your next challenge!