How Long Is A Debt Good For? Part III: Saskatchewan

(There was no article posted last week – Kingston Data and Credit has had the good fortune of being very busy this past two weeks. To the people who visited Receivable/Accounts last week looking for new content, thank you for your patience).

Many questions often arise about the age of a debt, and what can be done, especially when it comes to bad debt write-off, collections, the credit bureau, or legal action. Each Province has its own statute of limitation on legal action. These vary from province to province.
As the next article in our series, we will address the province of Saskatchewan.




The Limitations Act of Saskatchewan

In Saskatchewan, the Limitations Act has been updated fairly recently (as of this writing, it was updated in 2007).

As many other provinces, it states “no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered”. There is some definition of discovering the debt, but there is an ultimate limitation period of 15 years from the date of incurring the debt.

Judgments are stated to be actionable for ten years from the date of judgment or order.
Similar to Alberta, the provincial limitation is suspended for the period that the claimant (creditor) is disabled, either physically or mentally. There is also a unique clause that the limitation period does not apply for the period a claimant (creditor) is a minor. There is some language dealing with disabled persons or minors with agents, guardians, or powers of attorney that deals with specific circumstances.

As with other provinces, the date of limitation can be “reset” by a payment or acknowledgement of the debt. An acknowledgement of the debt can be a written refusal to pay, or not even address or offer payment. The acknowledgement must be in writing by the debtor or their agent, and the acknowledgement allowing a reset of the limitations period must be made within the original limitation period – thus, it appears as an example, that an acknowledgement of a debt six years after the debt was incurred is not sufficient to reset the limitation period – this effectively creates an absolute limitation period of four years for a non-judgment debt not dealing with other oddities involved in the matter.

There are some exceptions, and some circumstances that debts have no limitation, but they are specific, and bear reviewing the actual Limitations Act.\

Here is the link to the actual provincial act:

http://www.justice.gov.sk.ca/Limitations-Act




The Credit Bureau

Looking separately at the provincial rules in Saskatchewan, this is addressed in the Credit Reporting Act. Information regarding bankruptcies or judgments are kept for a period of six years (although there is an exception where the report of the judgment can be extended). A bureau can also include a debt or “adverse information” for a period of six years, or include older debts with the most recent payment within the last six years.

The Credit Reporting Act can be found here:

http://www.justice.gov.sk.ca/Credit-Reporting-Act




Who Can Look At A Credit Bureau?

In Saskatchewan, or any other province, there are rules on who can look at a credit bureau. Every person is entitled to look at their own credit bureau, and can in most cases sign permission to a company to look at their credit bureau.

In certain cases, unauthorized parties can look at a credit bureau. Any party attempting to collect on a debt can look at a credit bureau without the consumer’s knowledge or authorization. Any law enforcement agency can look at a bureau for the purpose of investigating or prosecuting a party, and the court can order a credit bureau can be given to another party.

Of course, the credit bureau includes a history of hard inquiries on the bureau – a consumer or creditor can see who has been examining their credit bureau record.

The major credit reporting companies in Canada, of course, are Equifax Canada (http://www.equifax.ca/, 1-800-465-7166) and Trans Union Services (http://www.tuc.ca/, 1-800-663-9980).




Conclusion

I received an email last week – it asked about our missing article last week (sorry again), and it asked why our company, and why I personally am doing this series of articles. Why is the Chief Operating Officer of a third party collection agency putting an article out there talking about what a collection agency can’t do, what debts aren’t valid, and help the consumers?

Let me tell you why – if you go to Google, and search for consumer rights in Canada, you find debt settlement companies (who will help you for a price), consumer rights’ lawyers (who will help you for a price, paid by a retainer in advance), and a few angry consumer forums where horror stories are told about collection agencies and their mistreatment of the average person. And meanwhile, the collection agencies are silent.

No one likes being told they owe money. Yet hundreds of collection agencies exist in Canada, and impact millions of Canadians – this is an essential part of the credit cycle, and deals with hundreds of millions of dollars every month. I have been in the field of credit and collections for over twenty years. And I don’t believe silence by the credit industry is necessary.

Consumers should be given the knowledge of what consequences can happen. Be it affecting their credit rating, or being subject to legal action, I believe this knowledge should be given to consumers, and then they should be given a fair choice to cooperatively submit payment, or live with the real and honest consequences. Collection agencies should be in the business of consequences, not intimidation or deception.

As always, if you have any questions regarding the pursuit of receivables, and the legal recourse of the creditor to secure their debts, you are certainly welcome to contact myself.

Blair Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
226-444-5695
http://www.kingstondc.com/
bwettlaufer@kingstondc.com

How Long Is A Debt Good For? Part II: Alberta

Many questions often arise about the age of a debt, and what can be done, especially when it comes to bad debt write-off, collections, the credit bureau, or legal action. Each Province has its own statute of limitation on legal action. These vary from province to province.

As the next article in our series, we will address the province of Alberta.


The Limitations Act of Alberta

Alberta’s Limitations Act (Revised Statutes of Alberta 2000, Chapter L-12) details what debts can be claimed with or without a judgment. 

On a basic claim of liability, it states that a debt is good for two years “after the date on which the claimant first knew, or in circumstances ought to have known” of the amount owed.  This allows two years for legal action.

There is also an absolute limit for a debt of “10 years after the claim arose”, negating a judgment after ten years if not enforced.

As with other provinces, the date of limitation can be “reset” by a payment or acknowledgement of the debt.  The Limitations Act is clear on the matter, stating that a payment must come from the debtor, an acknowledgement must be in writing, and signed by the debtor.  An interesting fact is that acknowledgement of a debt does not necessarily require a promise payment, and can eve include a refusal to pay.

Another interesting fact in the Act is that the limitation period is suspended if the creditor is a person under disability, for whatever period they are disabled.  Proof is on the creditor to prove the period of their disability, however.

For further information on the Limitations Act of Alberta, follow the link below

http://www.qp.alberta.ca/documents/Acts/L12.pdf

The Credit Bureau

The provincial laws that affect the credit bureau are the Fair Trading Act and the Credit and Personal Reports Regulation.  The limits outlined in these laws state that a credit report cannot include “unfavorable information about a debt is more than six years has elapsed since the date of last payment on that debt or the date the debt was incurred, whichever is later”.

Interestingly, while a judgment can be enforced for ten years, according to the Credit and Personal Reports Regulation, it cannot be listed on the credit bureau for “more than six years after the judgment was given, unless the creditor or creditor’s agent confirms the judgment remains unpaid in whole or in part, and the confirmation appears in the file”.

The provincial regulations also allow a consumer to add a statement of 100 words or less detailing why certain information is not accurate or complete, which must be included by the credit bureau in any report provided.

The Credit and Personal Reports Regulation can be found here:

http://www.canlii.org/en/ab/laws/regu/alta-reg-193-1999/latest/alta-reg-193-1999.html

And the Fair Trading Act is found at the following link:

http://www.qp.alberta.ca/documents/Acts/F02.pdf

Older Debts

Often creditors will continue to pursue a debtor on a debt older than six years. However, the creditor, debt buyer, or collection agency representing them generally has no legal recourse if the debtor refuses to pay. Many collection agencies seek to pursue on older debt, but this is a gray area that should be entered into carefully by both third parties and creditors. 

Note that as discussed above, the Limitations Act states if a debtor sends in a written refusal to pay, that can restart the option for legal action or registration to the credit bureau.


Bad Debt Write Off

When a company writes off accounts receivable amounts, it has no impact on whether it can be pursued or not. Small businesses often think it prevents them from collecting the account in the future, which is false – there is merely some bookkeeping to be done to account for the loss, and later recovery. If a debt has been written off, it is simply no longer counted on the balance sheet of the company as accounts receivable, which is an asset. The bad debt write-off removes it from accounts receivable. Should the funds be later recovered, it can be reflected as income upon remittance. For a complete explanation, consult with your accountant.


Student Loans

There is a special exception to student loans. As of July 8, 2008, Section 178 of the Canadian Bankruptcy and Insolvency Act was changed that affected all provinces, and states that student loans will not be discharged or forgiven through bankruptcy unless they file at least seven years from the date they ceased to be a part-time or full time student, unless they are granted a special exception by the Supreme Court in Bankruptcy. There are a number of fine details to the rules surrounding student loans, and would be a complex subject to be fully addressed in a separate blog article.


Conclusion

Limitations are an inevitability no matter what province you are in.  All creditors should have a plan on how to address their debts in a timely action.  I recently had a client list a file with our firm for legal action, with only two weeks remaining to file a claim – much scrambling was necessary.  Plan ahead, and decide a reasonable time line for enforcing your receivables.

Files should receive a final demand notice from your company no later than 180 days, and the ideal period would be 60 to 90 days.  Files should be assigned to a third party collection agency no later than 240 days, and the ideal period would be 120 days.  Legal action should be initiated, if necessary and the likelihood of garnishment or asset seizure is strong, no later than 18 months, but ideally by 360 days.

As always, if you have any questions regarding the pursuit of receivables, and the legal recourse of the creditor to secure their debts, you are certainly welcome to contact myself.

Blair Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
226-444-5695
http://www.kingstondc.com/

bwettlaufer@kingstondc.com

How Long Is A Debt Good For? -- Part I: British Columbia

Many questions often arise about the age of a debt, and what can be done, especially when it comes to bad debt write-off, collections, the credit bureau, or legal action.  Each Province has its own statute of limitation on legal action.  These vary from province to province.

This week, we will look at British Columbia. 

The Limitations Act

The Limitations Act details what the limitation is on claiming funds owed.  This allows a period of six years for undertaking legal action from the delinquency or acknowledgement of the debt.  This law is available online at the following location:

http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_96266_01

 

UPDATE: The British Columbia government has announced that as of June 1, 2013, their new Limitation Act comes into effect.  The basic limitation period for civil claims will be two years going forward, dating from “discovery of the claim”. An ultimate limitation period of 15 years will be in place as well. Any claims with debts incurred prior to June 1, 2013 may still fall under the old Limitation Act. Discovery has it’s own interesting terminology, and is not as simple as the language of some other provinces.

In British Columbia, a judgment is valid for ten years, as per their Limitations Act (linked above).  A judgment for possession of land, a debt owed from collateral, or other very specific circumstances, the Limitations Act states there is no limit to recourse, and is laid out within the law.

The Credit Bureau

Notwithstanding legal action, there is a separate limitation enforced by provincial law on what can be placed on the credit bureau.

The Limitation of a non-secured debt is addressed in Section 3 (5) of the BC Limitation Act, and sets six years as the limit for debt.  As with other provinces, the Limitations Act states with acknowledgement of the right of the creditor, or a partial payment, the time limit is reset.

In British Columbia that other law that governs reporting to the credit bureau is the Personal Information Protection Act:

http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_03063_01

Older Debts

Often creditors will continue to pursue a debtor on a debt older than six years.  However, the creditor, debt buyer, or collection agency representing them generally has no legal recourse if the debtor refuses to pay.  Many collection agencies seek to pursue on older debt, but this is a gray area that should be entered into carefully by both third parties and creditors.

Bad Debt Write Off

When a company writes off accounts receivable amounts, it has no impact on whether it can be pursued or not.  Small businesses often think it prevents them from collecting the account in the future, which is false – there is merely some bookkeeping to be done to account for the loss, and later recovery.  If a debt has been written off, it is simply no longer counted on the balance sheet of the company as accounts receivable, which is an asset.  The bad debt write-off removes it from accounts receivable.  Should the funds be later recovered, it can be reflected as income upon remittance.  For a complete explanation, consult with your accountant.

Student Loans

There is a special exception to student loans.  As of July 8, 2008, Section  178 of the Canadian Bankruptcy and Insolvency Act was changed that affected all provinces, and states that student loans will not be discharged or forgiven through bankruptcy unless they file at least seven years from the date they ceased to be a part-time or full time student, unless they are granted a special exception by the Supreme Court in Bankruptcy.  There are a number of fine details to the rules surrounding student loans, and would be a complex subject to be fully addressed in a separate blog article.

Conclusion

I believe that the older a debt is, the smaller the chances are of recovery.  If I were to advise a creditor on the most effective time frame for collections, it would be up to four years old.  Either legal action, or the pending action of listing on the credit bureau, or the after-effects of having reported the item to the credit bureau are greatest in this time frame.  Depending on the age of the account, and what action has occurred prior to that date to recover the file, a reasonable expectation of liquidation can be set.

As always, if you have any questions regarding the pursuit of receivables, and the legal recourse of the creditor to secure their debts, you are certainly welcome to contact myself.

Blair Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
226-444-5695
http://www.kingstondc.com/

bwettlaufer@kingstondc.com

Your Credit Bureau File

Often a collection agency will threaten to affect a consumer’s credit rating, and a consumer is simply not aware of what this means, or how it will impact them. Below is a summary of some information useful to consumers and debtors listed with a third party collection agency, providing some useful information to better understand how their credit bureau works.


How Do They Get My Information?

Every time you apply for credit, update your information with a trade item creditor, fill out an application with a landlord or authorize a credit check, open a bank account, apply for employment that does a credit check, you have an impact on your credit rating. As well, each inquiry shows up on your credit bureau profile, showing who has been looking at your file.

The information gathered by your applications and your creditors is displayed on your bureau -- your name, your date of birth, your social insurance number, your spouse, your telephone number, your address, and your place of employment. This is updated each time new data is provided to the credit bureau.

As well, every month, your trade items report to the credit bureau, showing your current payments (or lack thereof), and assign an aggregate score between a “1” and a “9” for each item. A rotating line of credit that you have maintained with payments on time would show up as an “R1”, for example.

If you have a secured line of credit based on a physical asset, such as a car, that security can be listed on the credit bureau, showing the dollar value of that security, and who holds it.

Lastly, if you are listed in a collection agency for an outstanding debt, or a judgment is received against you, it can be reported to your credit bureau, listing the creditor, the amount owed, and the current balance. As well, bankruptcies would be displayed on your bureau as well.

All of this information can remain on your credit bureau for a period of seven years, creating a narrative of your financial history and displaying patterns and habits.

Here is a sample of a credit bureau, to see what it might look like.

Who Is The Credit Bureau?

In Canada, there are two major competing credit bureau companies, registered under applicable provincial laws dictating what they are allowed to display on your credit bureau, and who can access your information. They are Equifax and Trans Union Services.

Each of these companies is a corporation in the business of making a profit, which they mostly do by selling inquiries. Usually listing data to the credit bureau is free, or almost free. However, each time an inquiry is made on your credit bureau file, there is a fee paid by the agency or creditor.

Because different creditors use either one or both of the bureaus, your credit ratings from each of these companies can look vastly different.

To contact Trans Union and Equifax, their telephone numbers are below:

Trans Union Services 1-800-663-9980
Equifax Canada 1-800-937-4093


What Can A Collection Agency Do To My Credit?

For any collection agency that is a member of one or both of the credit bureaus, they can upload a registered item to the credit bureau each month. It would show a creditor, collection agency, amount owed, and current balance. It might look like this:

18 JAN 12 – KINGSTON DATA CR/ABC COMPANY – 1502 – 1502

Our office typically lists files after an initial period to attempt to contact people before affecting the credit bureau of a debtor, and omit debtors with payment arrangements, but not all agencies allow this grace period.


Checking Your Own Credit

Every consumer should check their own credit report at least once a year, to see what has been reported, verify their information is correct, and have an understanding of what a creditor might see if you apply for credit.

You should not pay for your credit bureau report! There are many companies that earn revenue from selling you your credit report online, or offering to pull your credit bureau report on a subscription basis. You can request it for free, yourself.

To request your credit rating from Equifax, fill out the form linked here and mail it in with two pieces of identification. http://www.equifax.com/ecm/canada/EFXCreditReportRequestForm.pdf

To request your credit rating from Trans Union, you can visit their offices in Burlington, Ontario personally and receive a copy after displaying your identification. I have previously written about Trans Union Here: http://receivableaccounts.blogspot.com/2011/01/trans-union-services-has-moved.html


Disputing A Rating

Your credit bureau is a compilation of creditor information, and it not a “pass/fail” grade on your credit-worthiness. If a collection agency has an alleged debt that they wish to list on your bureau file, there is little recourse you have. However, you can request an investigation into the accuracy of the information. If the information is accurate and can be supported by a documented invoice or statement, the item will remain on the credit bureau.

To dispute an item on your Trans Union report, http://www.transunion.ca/ca/personal/creditdisputes_en.page  

To dispute an item on your Equifax Canada report, http://www.consumer.equifax.ca/dispute-ca/dispute_process/en_ca

Understand that your creditors may update the disputed item on your credit report each month, which means your disputed item may be placed back on the credit bureau up to 30 days later.


Conclusion

If as a consumer you have questions about what a collection agency can do to your credit rating, the information above should provide you a basic understanding. If you have questions regarding this, you are welcome to email me your questions.

Blair Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
226-444-5695
bwettlaufer@kingstondc.com

Credit Bureau or Small Claims Court?

Ultimately, a collection agency is a toothless beast without consequences for a debtor owing a balance.  There is the stigma of receiving calls and letters, or the soft leverage of compound interest or denial of service by the client, but the major consequences a third party agency can bring to bear are listing a debt on the credit bureau, or undertaking legal action.

On January 1^st, 2004, the Limitations Act in Ontario was updated, impacting many different laws across the board.  Most significantly was the change to a small claims or general court actions, changing the maximum time to take legal action to two years from delinquency or acknowledgement of the debt.   

The Consumer Reporting Act was not changed, and still allows an outstanding amount to be recorded on a person or corporate credit bureau profile for a maximum of seven years.

A court judgment may secure a balance for an extended period of time, but the point isn’t to acquire an expensive court document, it’s to enforce payment.  To acquire a default judgment without a defense and file a garnishment will cost at minimum $400.  If a defense is filed or there are complications with serving the statement of claim, or a debtor examination is necessary to enforce judgment, this cost can easily climb to $1200.  You can certainly ask for costs with your judgment, but often a judge will only grant a portion of this expense.  And this expense can only be recovered if you are able to satisfy your judgment.

Through a third party agency, listing an item on the credit bureau costs nothing.  As long as accurate information about the debtor or company is provided, the listing will be matched to the correct credit bureau profile. 

What Action Is Best

If the owing balance is under $3000, the credit bureau is your most effective and cost-efficient manner of recovering your funds in the long-term.  If your contract or invoice allows interest, all the better.

If your account is over $3000, and you have a definite source for garnishment, then court action may be worthwhile, with immediate and tangible results.  But if the employment is temporary or transient, the odds of a defense being filed are high, or the contract or service agreement to back up the statement of claim is weak, then perhaps court action may be a risk to your company, throwing good money after bad debt.

In my experience, I have found the credit bureau to be a more globally effective tool for enforcing debts in the long run.  Court action certainly has its’ place, but on the grand scheme of things, in this current day and age a good percentage of consumers are likely to require credit within a period of seven years.  We had one client that requested our office to list their significant number of files (approximately 18,000 files) on the credit bureau for consumer debt, and we measured the return over an extended period of time.  Here are the results we tracked:

Time	Repayment %	Repayment with Interest %
< 3 months	0.1%	0.1%
3 months – 1 year	1%	1.1%
1 year – 2 years	2%	2.3%
2 years – 3 years	3%	3.5%
3 years – 4 years	3.7%	4.4%
4 years – 5 years	4.2%	5.1%
5 years – 6 years	4.4%	5.4%
6 years – 7 years	4.5%	5.8%

This client’s overall liquidation with our agency was 21%, which was higher than they had experienced with their previous agency … nearly a third of their recoveries came from the results credit bureau action.  The 5.8% recovery represented almost half a million dollars.

Summary

The right leverage for the right debtor is imperative.  If you need advice on your outstanding receivables, or you are not seeing results from your existing collection agency after a period of 90 days, odds are they are not reporting your files to the credit bureau, and should be.  Feel free to contact my office at Kingston Data and Credit, at my direct line of 226-444-5695 to discuss the right options for your collection accounts.

Blair Wettlaufer

Signal Boost for TenantCheck

Hello everyone,

I have recently dealt with a newer company called TenantCheck, a credit inquiry company that exists for Landlord-Tenant screening. It is not as regimented as belonging to one of the national credit reporting agencies, and doesn't provide a complex credit report with tradelines, but it does look like a good service for a landlord with one or more rental units. I asked Dawn at the company for some information regarding their services, and she provided me this:

TenantCheck is a great asset to homeowners who have rental properties and need to find suitable tenants or are renewing a lease with existing tenants. We can provide service to homeowners all across Canada and also have the ability to pull US consumer files if you have someone who has just relocated from the United States. We currently offer a recommendation to you based on a full credit check and FICO score. Want to learn more? Email us for more information at tenant.check@yahoo.ca or call 289-237-9201.

Our company is based on the belief that our customers' needs are of the utmost importance. Our team is committed to meeting those needs. As a result, a high percentage of our business is from repeat customers and referrals. TenantCheck handles both fax based clients and online clients (via email) with average turn around time of 4 hours. We would welcome the opportunity to earn your trust and deliver you the best service in the industry.

http://tenantcheck.vpweb.ca/Home.html