by Raymond » Thu Mar 06, 2008 07:53:22 PM
Look, here's what the Ontario limitations Act says about unsecured debt that went into default after Jan. 1, 2004. It appears to have been modelled on the Alberta one which came into effect on March 1, 1999, if my memory is correct. The relevant parts are Sections 4 and 5 which state that the limitation period begins when the injury (i.e. unsecured debt) went into default OR when the creditor OUGHT to have known that it did.
The latter reverse onus position mandated by Section 5 (1) (b) is obviously there to stymie creditors deliberately trying to circumvent the Act by saying that after 5 or 10 years, they suddenly discovered the debt was oustanding, and that they now should be eligible to file a lawsuit and clog up the court system.
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BASIC LIMITATION PERIOD
4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4.
Discovery
5. (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).
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And so referring to the date of last activity that the credit reporting bureaus use: If you default on a credit card and make your last payment on say, the due date of Feb. 28, 2008, how does the creditor know that is going to be the last payment you're about to make on the account? Even if you miss your March 28, 2008 payment, that only means that your account slips from R1 to R2. It doesn't become R4 until you miss 3 consecutive payments or until June 28, 2008, 120 days after the date of last activity. By then the creditor will have certainly sent you a written notice cancelling your borrowing privileges and you'll have had several calls from their internal collections department. Thus certainly by that date, the creditor would have to have known the account had been defaulted on.
However, it may have been that your last couple of payments were below the minimum required or perhaps you were paying intermittently. Maybe you called them up and admitted you were in financial difficulty.
In that case, a court might well recognize that the creditor ought to have known that there was going to be a serious problem with the account sooner than when you missed the first, second or third payments. The circumstances of every case are a little bit different and so that's why, according to the legislation anyway, the date of last activity on an account is not necessarily when the limitation period starts. Judges in civil matters enjoy a certain latitude; and it's possible one might arbitrarily decide to make it start on the date of the last payment if the evidence presented to him is ambiguous. Sorry, I can't be more exact, but it would be dangerous, I think, to assume it necessarily occurs on the date of last activity because that's not what the law says.
Ray