What Happens If You Ignore Debt Collectors in Canada? (2026)

If you ignore debt collectors in Canada, they will escalate collection efforts through increased contact attempts, credit bureau reporting, debt sale to buyers, and lawsuits if the debt is within your province’s statute of limitations—2 to 6 years depending on location—potentially leading to wage garnishment or asset seizure if a judgment is obtained. Most creditors follow a predictable escalation pattern designed to pressure you into payment before pursuing expensive legal action. Understanding this timeline and your provincial statute of limitations helps you assess the real risk of ignoring collection attempts.

What Happens When You Ignore Debt Collectors: The Escalation Timeline

Debt collection follows a predictable escalation pattern that intensifies over time if you do not respond or make payment arrangements. In months 1-3 after you stop paying, the original creditor attempts to collect directly through phone calls, emails, and letters. Call frequency typically increases from once per week to daily as the account ages.

Between months 4-6, the creditor charges off the debt and either transfers it to a third-party collection agency or sells the debt to a debt buyer. Charged off means the creditor writes off the debt as a loss for accounting purposes but does not forgive it. At this stage, collection calls and letters intensify, and the debt is reported to Equifax and TransUnion as a collection account.

Months 6-12 involve aggressive collection efforts from agencies or debt buyers. You may receive multiple calls per day, though provincial laws limit contact frequency. If collection attempts fail, the debt may be sold again to another buyer who restarts collection efforts.

Between months 12-24, creditors or debt buyers decide whether to file a lawsuit. This decision depends on the debt amount, your province’s statute of limitations, and whether you have income or assets to garnish. If the debt is within your province’s limitation period and you have garnishable income, a lawsuit becomes likely for debts over $3,000-5,000.

After month 24 and beyond, if the creditor obtains a judgment, they can pursue wage garnishment or bank account seizure. Judgments are valid for 10-20 years depending on your province and can be renewed. Garnishment continues until the full judgment plus interest and legal costs are satisfied.

Does Ignoring Debt Collectors Make the Debt Go Away?

Ignoring debt collectors does not eliminate the debt or remove it from your legal obligations. The debt remains legally owed, continues accruing interest at the contract rate, and appears on your credit report for 6 years from the date of last activity. Creditors retain the right to contact you, report the debt to credit bureaus, and pursue legal collection as long as the debt is within your province’s statute of limitations.

After your province’s statute of limitations expires—2 years in Ontario, Alberta, BC, Nova Scotia, and New Brunswick; 3 years in Quebec; or 6 years in Manitoba and most territories—creditors can no longer successfully sue you because you have a valid legal defense. However, the debt still exists morally and collectors can still contact you to request payment.

The statute of limitations prevents lawsuits but does not prevent other collection activities. Collectors can continue calling, sending letters, and reporting the debt to credit bureaus for the full 6-year credit reporting period. The debt remains on your credit file regardless of whether the statute has expired.

Interest continues accruing on most debts even after you stop paying and stop responding to collectors. A $10,000 credit card balance at 19.99% annual interest grows by approximately $2,000 per year if no payments are made. Some debt buyers purchase debt at steep discounts and may accept settlement offers for 40-60% of the current balance because they acquired the debt for only 4-8 cents on the dollar.

When Ignoring Debt Collectors Is Risky vs Safer

Ignoring debt collectors carries different levels of risk depending on your financial situation, the debt’s age, and the type of debt. HIGH RISK situations include: debt within your province’s statute of limitations, steady employment income that creditors can garnish, secured debt where the creditor can repossess assets without a lawsuit, and CRA tax debt with no statute of limitations and administrative garnishment powers.

You face the highest risk when you have regular paycheques and the debt is recent. Creditors prioritize garnishment targets with stable income because garnishment provides reliable monthly recovery until the judgment is satisfied. Even if you change employers, creditors can obtain new garnishment orders against your new employer.

Homeowners face higher risk because creditors can register judgments against your property title. While creditors cannot force a sale of your principal residence in most cases, the judgment creates a lien that must be paid if you sell or refinance. This can prevent you from accessing home equity or selling your home.

LOWER RISK situations include: debt past your province’s statute of limitations, no regular income or employment, no significant assets, and collections that have persisted for 3-plus years without legal action. Creditors are unlikely to sue for statute-barred debt because even if they obtain a default judgment, you can apply to have it set aside by raising the statute of limitations defense.

If you have no income and no assets, creditors have limited collection options even with a judgment. Garnishment requires employment income, and asset seizure requires owning property with equity. However, judgments remain valid for 10-20 years and can be enforced if your financial situation improves.

If you’re experiencing multiple warning signs—escalating collection calls, threats of legal action, or credit damage affecting your life—these may be signs you need a consumer proposal. Understanding your specific risk level helps you decide whether to continue ignoring collectors or pursue legal debt resolution through a consumer proposal.

Statute of Limitations: When Creditors Can’t Sue You Anymore

Provincial limitation legislation sets time limits on how long creditors can successfully sue you for unpaid debt. Once the statute expires, creditors can still file a lawsuit but you have a valid legal defense that should result in dismissal. The limitation period begins from the date of your last payment or last written acknowledgment of the debt, whichever is later.

Ontario, Alberta, BC, Saskatchewan, Nova Scotia, and New Brunswick have 2-year statutes of limitations on debt. If you made your last payment on January 15, 2024, the limitation period expires on January 15, 2026, and creditors cannot successfully sue you after that date.

Quebec has a 3-year limitation period. Manitoba, Northwest Territories, Prince Edward Island, Nunavut, and Yukon have 6-year limitation periods.

Making a payment or providing written acknowledgment of the debt restarts the statute of limitations clock in most provinces. A $50 partial payment made 18 months after you stopped paying restarts the 2-year clock from the date of that partial payment. Simply ignoring collection calls and letters does NOT restart the clock.

If sued for statute-barred debt, you must file a statement of defense with the court citing the limitation period. The case will not be automatically dismissed; you must assert the defense. If you fail to respond to the lawsuit, the creditor can obtain a default judgment even if the debt is statute-barred.

Use the statute of limitations calculator to determine whether your debt is still within the limitation period.

Credit Report Impact: How Long Collection Accounts Stay

Collection accounts and debts remain on Equifax and TransUnion credit reports for 6 years from the date of last activity, which is typically your last payment or the first date the account became delinquent. This 6-year reporting period runs independently of your province’s statute of limitations and continues regardless of whether you respond to collectors.

A debt that becomes statute-barred after 2 years in Ontario will still appear on your credit report until the 6-year mark. The statute of limitations prevents creditors from successfully suing; it does not remove the debt from credit files or shorten the reporting period. Learn more about how collection accounts affect your credit report.

Judgments obtained by creditors report separately on credit files and remain for 6-7 years from the date of judgment depending on the credit bureau. Equifax reports judgments for 6 years in most provinces, while TransUnion may report them for 7 years.

Ignoring debt collectors does not shorten the credit reporting timeline or improve your credit score. Collection accounts severely damage credit scores, typically dropping scores by 80-120 points. Multiple collection accounts compound the damage.

The only ways to address collection accounts on your credit report faster than waiting 6 years are: paying the debt in full, which updates the account to paid collection status but still reports for 6 years from the original delinquency date; settling the debt for less than owed, which reports as settled collection for 6 years; or including the debt in a consumer proposal or bankruptcy, which has separate credit impact.

Consumer proposals report as R7 on credit files and are removed 3 years after completion or 6 years from filing, whichever comes first. For many people with multiple collection accounts, filing a consumer proposal results in faster credit recovery than waiting for each collection to age off naturally.

CRA Debt: Why You Should Never Ignore Tax Debt

CRA operates under different rules than private creditors and has extraordinary collection powers that make ignoring tax debt extremely risky. There is no statute of limitations on CRA tax debt, meaning CRA can pursue collection indefinitely regardless of how old the debt is. CRA can collect on income tax debt from 10, 15, or 20 years ago with the same legal authority as debt from last year.

CRA can garnish wages without obtaining a court judgment by issuing a Requirement to Pay notice directly to your employer under section 224 of the Income Tax Act. This administrative power allows CRA to bypass the court system entirely. CRA typically issues Requirement to Pay notices 90-180 days after sending demand letters for unpaid tax debt.

CRA can garnish up to 50% of gross income for employees and up to 100% of receivables for contractors or self-employed individuals. Provincial wage protection limits do not apply to CRA garnishment. CRA can also freeze your bank accounts without notice and seize the funds to offset tax debt.

Beyond garnishment and account seizes, CRA can intercept tax refunds, GST/HST credits, and Canada Child Benefit payments. These interceptions continue indefinitely until the tax debt is satisfied. CRA can also register liens against real property and, in extreme cases, force the sale of assets to satisfy tax debt.

The only effective ways to stop CRA collection are filing a consumer proposal or bankruptcy, or negotiating a payment arrangement before aggressive collection begins. Consumer proposals stop CRA garnishment immediately through the legal stay of proceedings. CRA typically accepts proposals that offer more than CRA would receive in bankruptcy, making proposals the preferred option for most people with tax debt.

Never ignore CRA collection letters or Requirement to Pay notices. Contact CRA immediately to discuss payment options or consult a Licensed Insolvency Trustee about including tax debt in a consumer proposal.

What Debt Collectors Can and Cannot Do While You Ignore Them

Provincial consumer protection legislation and federal regulations strictly limit debt collector behavior regardless of whether you respond to their contact attempts. Understanding these rules helps you identify illegal harassment that should be reported.

Debt collectors CAN: contact you by phone, mail, email, or text to request payment; report the debt to Equifax and TransUnion credit bureaus; sue you if the debt is within your province’s statute of limitations; obtain wage garnishment or asset seizure orders after winning a judgment; and offer settlement arrangements for less than the full balance.

Debt collectors CANNOT: contact you more than 3 times in 7 days in Ontario and Alberta; call outside permitted hours, typically Monday-Saturday 7am-9pm and Sunday 1pm-5pm in BC with similar rules in other provinces; contact you on statutory holidays in BC and some other provinces; use threatening, coercive, or intimidating language including threats of physical harm or arrest; threaten jail time for civil debt, which is illegal and false; discuss your debt with third parties without your permission, except the original creditor, guarantor, or your legal representative; charge additional collection fees beyond the original debt in Ontario; or contact you in ways that cost you money, such as collect calls or telegrams.

If collectors violate these rules, document every violation with date, time, collector name, agency name, and detailed notes about what was said. Report violations to your provincial consumer protection authority: Ontario Ministry of Public and Business Service Delivery, Consumer Protection BC, Service Alberta, or the equivalent in your province.

You can also file complaints with the Financial Consumer Agency of Canada for federally regulated financial institutions. Use the harassment score calculator to assess whether collector behavior crosses legal lines.

Bottom Line: Ignoring Debt Has Consequences—Better Options Exist

Ignoring debt collectors leads to escalating consequences including credit damage for 6 years, potential lawsuits if debt is within your province’s statute of limitations at 2-6 years, and wage garnishment of 20-50% of your paycheque if creditors obtain judgments. While debt past the statute of limitations offers protection from new lawsuits, existing collection accounts remain on credit reports for 6 years and creditors can still contact you indefinitely. CRA tax debt carries the highest risk because there is no statute of limitations and CRA can garnish wages without court orders.

Consumer proposals provide legal protection that stops all collection activity, wage garnishment, and lawsuits immediately through a stay of proceedings while allowing you to repay only 20-40% of what you owe over 3-5 years. In 2024, 78.6% of Canadians filing insolvency chose consumer proposals over bankruptcy. Proposals report as R7 on credit files and are removed 3 years after completion, often resulting in faster credit recovery than waiting for collection accounts to age off naturally.

Stop collection calls legally with a consumer proposal—free consultation, no upfront cost. End collection calls today.

Disclaimer: This article provides general information about Canadian debt collection laws and should not be considered legal or financial advice. Consult a Licensed Insolvency Trustee for advice specific to your situation. Provincial collection rules and statute of limitations vary.

Last updated: February 2, 2026