Know The Law

Legal reference · February 22, 2026

Collection Agencies & Your Rights

Overview

In Ontario, collection agencies are governed by the Collection and Debt Settlement Services Act (CDSSA). While a creditor has the right to seek payment for a legitimate debt, they—and the agencies they hire—must follow strict rules regarding how and when they contact you.

For many Ontarians, debts from the COVID-19 era (2020-2022) are now surfacing. Understanding the intersection of the Limitations Act and the CDSSA is the best defence against unfair collection practices.

1. The "Power Move": The Dispute Notice

If you are being contacted for a debt you do not owe, or a debt that is statute-barred (too old to sue over), you have the legal right to stop the calls.

Legal Fact: Under Ontario Regulation 103/06, if you send a written notice to a collection agency stating that you dispute the debt and suggest they take the matter to court, the agency must stop contacting you immediately.

Why this works:

If a debt is from 2020, the 2-year statute of limitations to sue has likely expired. By telling them to "take it to court," you are forcing them to use a legal avenue they no longer have access to, effectively ending the collection attempts.

2. Prohibited Collection Practices

Collection agencies are forbidden from doing the following in Ontario:

  • Harassment: They cannot call so often that it constitutes harassment. Generally, they are limited to 3 contacts per 7-day period after the first conversation.
  • False Representation: They cannot use documents that look like court forms or claim they are "legal officials."
  • Added Fees: Agencies generally cannot add their own "collection fees" to the balance you owe unless specifically permitted in your original contract or by law.
  • Contacting Others: They cannot contact your employer, family, or friends except to get your address or phone number (and even then, only once).

3. The 6-Year Credit Rule

While an agency might try to collect a debt forever, they cannot damage your credit score indefinitely.

  • The Expiry: Under the Consumer Reporting Act, most negative information must be removed from your credit report 6 years after the date of the first delinquency.
  • The Danger: Be careful—making a small payment or acknowledging the debt in writing can "reset" this clock, as well as the 2-year limitation clock.

4. Know Your Defences: "Sweat Equity" & Set-Off

If a landlord or business is pursuing you for debt, but you provided services (like home upgrades or repairs) that increased their value, you may have a defence known as Equitable Set-Off.

  • This allows you to argue that the value you provided should be deducted from the debt they claim you owe.

Practical Checklist: If a Collector Calls

  1. Ask for written notice: They must send you a written notice through the mail (or email if you agree) before they start calling.
  2. Verify the timeline: Check if the debt is more than 2 years old.
  3. Do not pay a "token amount": This can restart legal timelines.
  4. Send a registered letter: If you want the calls to stop, use the "Dispute and Court" language mentioned above.

Important Legal Disclaimer

KnowTheLaw.ca is an information repository, not a law firm. The materials provided on this Collection Agency & Debt Rights page are for educational and research purposes only.

Debt collection and consumer protection laws are subject to strict timelines and procedural requirements. The information provided here does not constitute legal advice or legal analysis. We do not provide opinions on how these laws apply to your specific situation or the validity of any specific debt. Accessing this site does not create a paralegal-client or solicitor-client relationship. We strongly urge you to consult with a licensed legal professional to discuss your rights and obligations regarding debt collection, credit reporting, and the Limitations Act.