What is Re-Aged Debt?

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Re-ageing of debt is when there is a restart on an old debt’s statute of limitations. For instance, if a borrower talks to a creditor and makes a payment on an old debt, re-ageing happens. Re-ageing is good for debt collectors as it gives them the legal ability to collect a debt. Without it, creditors and collectors can’t take legal action against the borrower who is not making payments on time or don’t intend to pay. But what exactly is a statute of limitations?

Statute of Limitations

In Canada, both the Federal and provincial Governments have statutes of limitations. It states the maximum, legal amount of time that a lender has to pursue legal action on unsecured debt. That is, if the unsecured debt is not being collected and payments are late or not being made within an allotted period of time, creditors and collectors cannot take legal action against you.

According to the Federal Government of Canada, the debt cannot be pursued after six years. Actually, every province has its own time frame so it is wise to know what your province policy says about it. For instance, the statute of limitation in BC is 6 years, Alberta 2 years, Saskatchewan 2 years and Manitoba 6 years.

How Does Re-aged Debt Works?

If a person lives in BC and has not made payments to his car loan. The debt collector has six years to collect that outstanding debt and take legal action against you. After six years, if you still have not made any payments toward your car loan, then your debt collector can’t take any legal action against you.

Can Creditors and Collector Reset Statute of Limitations?

Yes, creditors and collectors can reset statute of limitations, which extends the amount of time that creditors and collectors need for law to collect the debt. This resetting period depends on the behavior of the borrower. If you as a borrower had not paid your payments for long, then the debt is reopend. Collectors then have the right to sue you in order to collect the debt.

If you make a payment on your debt, it will start the re-aging process and you will be responsible to pay back the debt. If you inform the debt collector that you intend to pay your payments in the future, your debt will be renewed. Thus, speak wisely even if it is verbal. If you say you will make future payments, then you will have to.

Creditor Trying to Contact You? What to Do Now

After Statute of Limitations

If creditor or collection agency is trying to contact you, do not answer their questions or give your voluntary information. Instead, take down the personal information and details of your debt from them, mainly when your debt became past due. Verify the information and see if their information is correct or not. If your debt is past the statute of limitations for your province, collectors and creditors are not legally allowed to sue you for their debt.

Before Statute of Limitations

If a collector or creditor is trying to contact you within the alloted period of time, then you will have to pay the amount due. If the collector refuses to give out any personal infomration they have, then they may be trying to mislead you into acknowledging that you will make a payment.

The Bottom Line

First and foremost, know your rights and regulations about debt collection. This will help you defend yourself against any scam or being taken advantage of. Secondly, it should be your number one goal to pay back your creditors and work toward being debt-free as soon as you can. Finaly, check the statute of limitations for your province, and verify how long your creditors or lenders has to take before they can take legal action against you.

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