If you don't pay your debt - Debt collection at the CRA (2024)

FAQs

If you don't pay your debt - Debt collection at the CRA? ›

If you have a debt and haven't confirmed arrangements to pay it, or if you don't make your scheduled payments on time, we may begin legal actions. Before we start legal actions, we will generally: Make up to 3 attempts to give you a verbal legal warning by phone. Send 1 written legal warning letter.

If you sign a secured credit agreement and don't make your payments, the creditor has a legal right to seize the security. If the value of the security doesn't cover your debt, the creditor may also sue you for any money left owing, including interest and costs.

Can you get out of collections without paying? Many Canadians believe that unpaid debt disappears at some point if you ignore it long enough, but the reality is that debt doesn't stop existing unless you repay it. If you have unpaid debt, you will continue to owe money for the rest of your life.

Collecting Canadian debt in the US can be easy and possible, yet it depends solely on your paperwork and credit checks. At PCM Corp, we have over 30 years of experience with cross-border debt collection (as well as International Debt Collection).

Can a collection agency take you to court? Yes, a collection agency that has bought the debt from the creditor can take you to court, as can a creditor themselves. However, you will seldom be taken to court for a debt that is less than six months overdue.

Can you go to jail for not paying student loans? No, you won't be arrested or go to jail for not paying your student loans. No, you won't be arrested or go to jail for not paying your credit card debt. In Canada, not paying your creditors is not cause for arrest or imprisonment.

Ignoring a collection agency can negatively impact your credit, cause your debt to accrue interest and potentially result in a lawsuit. It's ultimately better to pay or dispute a debt than avoid debt collection agencies altogether.

6 years, except when: provincial legislation (a judgement) overrides the original limitation (may vary from 10 years to unlimited) the loan was established or expired before August 1, 2003 (no limitation period)

Can a Debt Collector Collect After 10 Years? In most cases, the statute of limitations for a debt will have passed after 10 years. This means a debt collector may still attempt to pursue it (and you technically do still owe it), but they can't typically take legal action against you.

Technically, nothing happens to your debt when you leave the country. It's still your debt, and your creditors and collectors will continue trying to get you to pay it back. Just as they would before, those efforts may include phone calls and letters.

Can Canadian debt follow you to another country? ›

If you have left Canada, have not been paying your creditors, and have not filed a form of debt relief, your creditors can still pursue legal action against you. They are well within their rights to sue you, and continue to collect on their debts no matter where you are in the world.

While we are not lawyers, we can state with confidence it is unlikely someone would be detained by a Border Agent upon their return to Canada if any type of consumer debt (such as student loans, income taxes or credit cards) is outstanding.

If you stop making payments to a creditor or collection agency, they can sue you for the money you owe. The court will look at factors like the size and age of your debt, how much you make and what assets you own.

Another factor to consider is that taking someone to court is costly, so it's unlikely that a collection agency will sue for a small amount, especially if it's smaller than the cost of a court case, which can reach upward of $10,000.

Most debt collectors won't sue for less than $500. However, any unpaid debt can potentially result in collections legal action regardless of amount owed if the collector determines suing worthwhile.

Creditors – if you have unpaid debts like credit card debts, personal loans, or payday loans, creditors are able to have your Canada bank accounts frozen. It isn't as straightforward as simply freezing your bank account, however.

Technically, nothing happens to your debt when you leave the country. It's still your debt, and your creditors and collectors will continue trying to get you to pay it back. Just as they would before, those efforts may include phone calls and letters.

Unless the debt is substantial, most creditors will refrain from pursuing you internationally. Instead, they may attempt to pressure family members still in Canada, suggesting severe consequences if the debt isn't repaid. However, this is a myth. Creditors, like everyone else, must abide by the law.

If you're facing debt collection, it's important to understand how the process works and what options you have. If you ignore a debt in collections, you can be sued and have your bank account or wages garnished or may even lose property like your home. You'll also hurt your credit score.