Does debt disappear after 7 years in Canada?

_{credit report, debt expiration, British Columbia}

In Canada, debt doesn’t just disappear after 7 years. Though creditors might stop pursuing collection after 2 to 6 years, the debt can still linger on your credit report. This impacts your credit score and potential lending opportunities. Remember, the obligation to pay doesn’t vanish with time.

Show Table of Contents

_{Debt expiration in Canada impacts your credit report.}

Credit Report Question

Does debt disappear after 7 years in Canada? I want to know if debt truly disappears after seven years in Canada. It’s not clear what happens after that time frame.

From: Anonymous Question
Location: Kelowna, British Columbia (BC)
Category: financial planning

Credit Report Answer

In Canada, debt doesn’t simply vanish after 7 years. While creditors may lose their legal right to collect on a debt after a certain period—typically between 2 and 6 years, depending on where you live—the debt itself sticks around. Plus, even when the time’s up for legal collection, expired debt can still show up on your credit file for up to 7 years. This can impact your credit score and how you might be viewed by potential lenders. Remember, the obligation to pay back what you owe remains, even if the collections calls stop after the statute of limitations ends.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

In Canada, consumer debts do not automatically disappear after seven years. The limitation period for bringing a legal action for most debts is generally two years, as per provincial laws, but this varies by province. However, credit reporting agencies typically remove debts from credit reports after six or seven years from the date of the last activity on the account, depending on the type of debt. This means while the debt may not appear on your credit report anymore, it does not erase the obligation to pay unless legally discharged through bankruptcy or a consumer proposal. For specific details, refer to the Bankruptcy and Insolvency Act, RSC 1985, c 11, where it outlines the guidelines for debt management and discharge.

From: OSB Helper

Related Questions to Debt Expiration

Here are the top 5 most frequently asked questions related to the notion that “debt disappears after 7 years” in Canada, along with brief answers:

1. Does debt disappear after 7 years?

No, debt does not disappear after 7 years, although it may drop off your credit report.

2. What is the statute of limitations on debt?

The statute of limitations on debt varies by province, ranging from 2 to 6 years, depending on the jurisdiction.

3. Can creditors still collect debt after the statute of limitations?

Yes, creditors can still attempt to collect debt after the statute of limitations expires, but they cannot take legal action.

4. How long does debt stay on my credit report?

Debt typically stays on your credit report for 6 to 7 years from the last payment or default date.

5. What happens to debt when it is no longer on my credit report?

Even if debt is no longer on your credit report, you still owe the money and creditors can continue to try to collect it.

If you have a question about debt see our debt questions or ask your own debt related question.

References

_{Table of article references}