Alberta Debt Collection Laws 2026 - 10-Year Ultimate Limitation Period

Alberta has a 2-year limitation period among the shortest in Canada, but provides the weakest wage garnishment protection at only 50% exempt. With Alberta’s economy tied to oil and gas creating boom-bust cycles, understanding both your collection rights and debt relief options is essential for financial stability.

Your Debt Collection Rights in Alberta

Under the Alberta Limitations Act, creditors have 2 years from the date of your last payment or written acknowledgment to commence legal action on most debts. This is one of the shortest limitation periods in Canada, tied with Ontario, BC, and several other provinces.

Alberta provides additional protection through a unique 6-year collection ban. Under the Collection and Debt Repayment Practices Regulation, collection agencies are explicitly prohibited from pursuing non-judgment debts where the last payment or written acknowledgment is more than 6 years old. This creates three distinct time periods:

Years 0-2: Collectors can call you and creditors can sue you
Years 2-6: Collectors can call but creditors cannot sue you
After 6 years: Collectors cannot even contact you about the debt

This 6-year collection ban goes further than most provinces. After 6 years, the debt is essentially uncollectible unless the creditor obtained a court judgment during the first 2 years. Making any payment or acknowledging the debt in writing restarts both the 2-year limitation period and the 6-year collection period.

When Debts Become Statute-Barred in Alberta

The 2-year limitation period applies to most unsecured debts including credit cards, personal loans, lines of credit, payday loans, and medical bills. If you’re sued within 2 years and receive a court claim, you have 20 days to file a dispute note with the court. Failing to respond leads to a default judgment, which then allows the creditor to garnish wages and seize assets.

Some debts have different limitation periods under federal or specific provincial rules:

Once a creditor obtains a judgment, they have 10 years to enforce it through wage garnishment, bank account seizures, or property liens. Judgments can be renewed before expiry, potentially extending enforcement indefinitely. This makes responding to lawsuits critical rather than ignoring them and hoping they expire.

Wage Garnishment Limits in Alberta

Alberta has the weakest wage garnishment protection in Canada with only 50% of wages exempt compared to 70-80% in most other provinces. The Civil Enforcement Act uses a sliding scale with minimum and maximum thresholds that provide some additional protection for low-income earners.

The garnishment rules work as follows: $800 per month plus $200 per dependent is the minimum protected amount, with a maximum exemption of $2,400 per month plus $200 per dependent. This creates three tiers:

For low-income earners below $1,600 per month, the $800 minimum provides more protection than 50%. For high earners above $4,800 per month, the $2,400 maximum cap means more than 50% can be garnished. Most workers fall in the middle range where exactly 50% is taken.

An Alberta worker earning $4,000 per month could lose up to $1,600 to garnishment, while an Ontario worker would only lose $800 from the same income. This makes consumer proposals particularly valuable in Alberta for stopping the high garnishment risk. Use the wage garnishment calculator to estimate your exposure.

Rules Collectors Must Follow in Alberta

Collection agencies in Alberta are regulated under the Fair Trading Act and the Collection and Debt Repayment Practices Regulation. Service Alberta licenses collection agencies and enforces consumer protection rules.

Prohibited practices include using threatening, profane, intimidating, or coercive language; giving false or misleading information; threatening legal action without creditor authority; and suggesting family members are responsible for your debt. Collectors cannot pursue debts older than 6 years from the last payment, which is unique to Alberta.

Contact restrictions limit collectors to 3 unsolicited contacts per 7 days not counting mail. While Alberta does not specify exact calling hours, industry practice limits calls to between 7 a.m. and 9 p.m. on weekdays. Collectors cannot contact you if you’ve informed them in writing that the debt is disputed and you want them to take you to court.

Third-party contact is heavily restricted. Collectors cannot discuss your debt with anyone except you, a guarantor, the creditor, or your authorized representative. They can contact your employer only to verify employment or obtain your contact information, not to discuss the debt.

Alberta has a unique repayment arrangement protection. Collectors cannot cancel or alter a repayment arrangement if you have complied with all terms, not misrepresented your financial circumstances, and not had material changes to your finances. This prevents collectors from accepting a payment plan and then demanding more money.

Options for Dealing With Debt in Alberta

When debt becomes unmanageable, Alberta residents have access to federal debt relief programs that provide immediate protection from creditors. Consumer proposals and bankruptcy are administered by Licensed Insolvency Trustees under the Bankruptcy and Insolvency Act. Both trigger an automatic stay of proceedings that stops all collection calls, wage garnishments, and legal action.

Alberta’s weak wage protection makes consumer proposals especially valuable. Filing a proposal immediately stops the risk of losing 50% of your wages to garnishment. With Alberta’s economy tied to oil and gas, boom-bust cycles create income volatility that makes fixed proposal payments more manageable than unpredictable wage garnishments.

Other options include negotiating directly with creditors for settlements, consolidating debts through a loan if you qualify, or working with credit counselling agencies to set up a debt management plan. Each approach has different requirements, costs, and credit impacts.

Consumer Proposals in Alberta

Consumer proposals offer Alberta residents significant debt reduction while keeping all assets and stopping wage garnishment immediately. You can reduce total unsecured debt by 60 to 80 percent typically, make fixed monthly payments for up to 5 years, and avoid bankruptcy.

Average consumer proposal statistics for Alberta show total debt around $48,000, proposal payments of 30 to 35 cents per dollar owed, monthly payments between $350 and $450, and completion rates above 80%. These numbers reflect Alberta’s economic challenges but demonstrate that proposals remain affordable and effective.

The consumer proposal process begins with a free consultation with a Licensed Insolvency Trustee. The trustee reviews your income, expenses, assets, and debts to calculate what creditors would receive in a bankruptcy. Your proposal must offer creditors more than this amount.

Once you agree on terms, the trustee files your proposal with the Office of the Superintendent of Bankruptcy. You immediately receive protection from creditors through the stay of proceedings. Wage garnishments stop, collection calls end, and lawsuits are stayed. This protection lasts throughout your proposal term as long as you make your payments.

Creditors have 45 days to vote on your proposal. If creditors holding the majority of the dollar value vote to accept, the proposal binds all unsecured creditors including those who voted against it or didn’t vote. You make your monthly payments for the agreed term, typically 3 to 5 years. Once you complete all payments, you receive a Certificate of Full Performance and your remaining unsecured debt is legally eliminated.

Consumer proposals are particularly effective for Alberta workers facing garnishment. Filing stops the 50% wage deduction immediately, often freeing up more cash flow than your proposal payment costs. Many Alberta trustees have experience with oil and gas industry debt issues including variable income, contract work, relocation debt, and boom-bust employment cycles.

Use the consumer proposal calculator to estimate what you might pay based on your income and assets. Consumer proposals result in an R7 rating on your credit report for 3 years after completion or 6 years from filing, whichever comes first.

Bankruptcy in Alberta

Bankruptcy provides immediate debt relief for Alberta residents with little income or assets. First-time bankruptcy typically lasts 9 months if you have no surplus income, or 21 months if you do. While bankruptcy has a more severe credit impact than a consumer proposal, it eliminates most unsecured debts quickly.

In bankruptcy, a Licensed Insolvency Trustee takes control of your non-exempt assets and distributes proceeds to creditors. Alberta bankruptcy exemptions under provincial law protect necessary items including household furnishings up to prescribed values, clothing, one vehicle up to a certain value, RRSPs except contributions in the last 12 months, and tools of the trade.

Most unsecured debts are eliminated including credit cards, personal loans, lines of credit, payday loans, tax debt, and medical bills. Student loans are only discharged if you’ve been out of school for at least 7 years. Secured debts, support payments, and court fines are not eliminated in bankruptcy.

Bankruptcy results in an R9 rating on your credit report which remains for 6 years after discharge for first-time bankruptcy. This is more severe than the R7 rating from a consumer proposal. Many people prefer proposals when they have stable income and want to avoid the stigma and credit impact of bankruptcy. Compare both options using the debt relief comparison tool.

What Happens If a Creditor Sues Me in Alberta?

If you’re sued within the 2-year limitation period, you receive a Statement of Claim setting out what you owe and why. You have 20 days to file a Dispute Note with the court if served within Alberta, or 1 month if served outside the province. Failing to respond within this deadline results in a default judgment against you.

Once a creditor has a judgment, they can take aggressive collection action. They can garnish up to 50% of your wages through your employer, freeze and seize funds from your bank accounts, register a lien against your property making it difficult to sell or refinance, and hire a civil enforcement agency to seize and sell assets.

If you’re served with a lawsuit, consider your options quickly. You can defend the claim if you dispute the amount or believe the debt is statute-barred, negotiate a settlement with the creditor before judgment is entered, or file a consumer proposal or bankruptcy which stays the lawsuit and prevents judgment. Consulting a Licensed Insolvency Trustee immediately after being served often provides the best outcome.

Licensed Insolvency Trustees in Alberta

Licensed Insolvency Trustees are federally regulated professionals who administer consumer proposals and bankruptcies throughout Alberta. In Calgary and Edmonton, numerous trustees serve the major urban areas. Trustees also practice in Red Deer, Lethbridge, Medicine Hat, Fort McMurray, Grande Prairie, and other communities across the province.

Many Alberta trustees have specialized experience with oil and gas industry debt challenges. They understand variable income from contract work, debt accumulated during relocations for work, and the financial stress of boom-bust employment cycles. This expertise helps structure consumer proposals that accommodate income volatility common in Alberta’s resource economy.

Most trustees offer free initial consultations by phone, video, or in person. During this consultation, the trustee reviews your complete financial situation and explains what you would pay in a consumer proposal versus bankruptcy. They also explain how each option affects your credit, what assets you can keep, and how long the process takes.

Use the Office of the Superintendent of Bankruptcy directory to find a Licensed Insolvency Trustee near you. Look for trustees with good reputations, clear explanations, and experience with situations similar to yours.

Filing a Complaint Against a Collector in Alberta

If a collection agency violates Alberta’s rules, file a complaint with Service Alberta. Document all interactions including dates, times, names of collectors, and the content of communications. Save voicemails, letters, emails, and text messages as evidence.

Common violations worth reporting include pursuing debts older than 6 years, calling at unreasonable hours or more than 3 times per 7 days, threatening illegal action, discussing your debt with your employer or other third parties, using threatening or abusive language, and cancelling compliant repayment arrangements.

File a complaint online at alberta.ca/file-consumer-complaint or call 1-877-427-4088. Service Alberta investigates complaints and can impose penalties up to $100,000 for contraventions of the Consumer Protection Act. While filing a complaint doesn’t eliminate the debt, it holds agencies accountable and supports enforcement action against collectors who break the rules.

Next Steps for Alberta Residents: How to Get Debt Help

Alberta’s weak wage protection makes consumer proposals especially valuable—filing immediately stops the risk of losing 50% of your wages to garnishment. With Alberta’s economy tied to oil and gas, many residents face boom-bust income cycles that make fixed proposal payments more manageable than unpredictable garnishments.

Calculate your potential consumer proposal payment to see what you might pay monthly. Check whether your wage garnishment exceeds legal limits using the wage garnishment calculator. Learn about the statute of limitations on debt in Canada including Alberta’s unique 6-year collection ban. Review how to stop wage garnishment if you’re already facing deductions. Compare all debt relief options using the comparison tool to find the best path forward.

Alberta’s 2-year limitation period and 6-year collection ban give you time-based protections, while federal debt relief programs provide proven solutions for eliminating debt legally while rebuilding your financial future.