Limitation Periods for Debt Collection in Ontario: How Long Does a Creditor Have to Sue?

If someone owes you money — or if you owe money to someone else — the question of how long a creditor has to sue is more complicated than most people realize. Ontario's limitation period for debt claims follows the same two-year basic framework as other civil claims, but there are important nuances: what restarts the clock, what a debtor's acknowledgment means legally, and what happens when a debt gets very old.

Whether you are trying to collect a debt or wondering whether an old debt is still legally enforceable against you, this article explains how the limitation period works in Ontario.

The Basic Rule: Two Years from Discovery

Under Ontario's Limitations Act, 2002, a creditor generally has two years from the date the debt was discovered — that is, when the creditor knew or ought to have known they had a right to demand payment and it was not being made — to commence a legal proceeding.

As of writing, this two-year basic period is the default for most debt claims between private parties, whether arising from personal loans, unpaid invoices, credit agreements, or services rendered. Verify the current rules with a lawyer, since exceptions exist and statutes can change.

When does a creditor "discover" the right to collect? Usually, this is when:

• The debt became due and was not paid (for a loan with a fixed repayment date)
• A demand for payment was made and refused or ignored
• The debtor communicated they would not pay

What Happens If the Two Years Pass?

Once the two-year basic limitation period expires, the creditor loses the legal right to sue to collect the debt. The debt does not vanish — it still exists as a moral or practical obligation — but the creditor cannot obtain a court judgment to enforce it.

This means:

• A creditor cannot issue a Statement of Claim to recover the debt
• Any claim filed after the limitation period can be dismissed by the debtor
• Enforcement tools (wage garnishment, property liens) that flow from a court judgment are unavailable

However — and this is important for debtors — an expired limitation period does not prevent a creditor from reporting the debt to a credit bureau (within the credit bureau's own reporting windows), asking you voluntarily to pay, or offsetting a debt against money they owe you (in some circumstances). The limitation period is a legal bar to suing, not a bar on all creditor activity.

The Ultimate 15-Year Backstop

Like other civil claims, debt claims are also subject to Ontario's ultimate 15-year limitation period (as of writing). Even if the two-year clock somehow never started (an unusual scenario), no debt claim can be pursued in court if more than 15 years have passed since the relevant act or omission — typically, the original date the debt arose.

This matters for very old debts. A debt from 2005 may be barred not just by the two-year clock, but definitively by the 15-year ultimate period.

Acknowledgment of the Debt: Restarting the Clock

One of the most consequential rules in Ontario debt limitation law is the acknowledgment rule. If a debtor makes a written acknowledgment of the debt, the two-year limitation period starts fresh from the date of that acknowledgment.

What Counts as an Acknowledgment?

A valid acknowledgment must be:

• In writing (verbal acknowledgments generally do not restart the clock under Ontario law)
• Signed by the debtor or their agent
• An acknowledgment of the debt's existence (not merely of having received correspondence)

Examples of acknowledgments that may restart the clock:

• A signed letter confirming the debt is owed and promising to pay
• An email (signed) acknowledging the outstanding balance
• A written payment plan agreement
• A partial payment, in some circumstances (see below)

Partial Payment

Under Ontario law, a partial payment on a debt can also restart the limitation period, provided the payment is made with knowledge that the claim is time-limited. This is another trap for debtors who pay "a little something" assuming it will not affect the old debt — in some cases, it revives the creditor's ability to sue for the full balance.

The Trap for Debtors

If you owe an old debt and the two-year limitation period has run out, be very careful about acknowledging the debt in writing. Even a well-intentioned email saying "I know I owe this, I'm trying to pay" can restart the clock and expose you to a fresh lawsuit.

Before communicating with a creditor about an old debt, consult a lawyer about whether the limitation period has expired and what your communication might do to your legal position.

Debts Arising from Specific Documents or Instruments

Some debt instruments have different limitation rules:

• Promissory notes and other formal instruments may have specific provisions
• Mortgage default has procedural nuances under real property legislation
• Tax debts owed to the CRA are governed by federal law and entirely different limitation rules — do not apply the two-year Ontario period to a CRA debt

Always confirm the applicable rule for the specific type of debt at issue.

For Creditors: Practical Steps to Protect Your Right to Collect

If you are owed money and the two-year deadline is approaching:

1. File a claim in court before the deadline — even if you hope to settle, issuing the claim protects your rights
2. Get a written acknowledgment from the debtor — this restarts your clock
3. Document all communications — you will need evidence of when the debt became due and when you demanded payment
4. Consider a payment plan agreement — a formal written plan acknowledged by the debtor restarts the period and creates a new enforceable obligation

Frequently asked questions