Can Ignoring Your Creditors Make Your Debt Go Away?

Can ignoring your creditors make your debt go away? This is a question that often haunts people who are in debt. While it might seem like a tempting solution to the incessant phone calls and letters, the reality is far from it. Ignoring your creditors does not make your debt disappear; on the contrary, it might worsen the situation.

The Perils of Ignoring Debt Collection Calls

Let’s address the elephant in the room. Ignoring debt collection calls is not a smart move. In fact, it could escalate the situation. If you ignore the calls, the debt collector might resort to filing a lawsuit, which could result in wage garnishment, seizure of personal property, or funds being deducted from your bank accounts.

Additionally, the debt collector might contact your employer, relatives, or any other contacts you provided when you applied for credit. Even if the calls stop, your credit score might still be adversely affected, hampering your future borrowing ability.

The Rights of Creditors: What Can Happen if You Ignore Them?

Creditors have legal rights to recover their money. Whether you answer their calls or not, they have several methods at their disposal:


  • They can approach their collection department, whose primary job is to recover overdue payments.
  • They can hire a debt collection agency to recover the money on their behalf.
  • They can sell your debt to a debt collection agency, which generally earns a percentage of what they collect.
  • They can file a lawsuit in court.
  • They can garnish your wages.
  • They can seize your personal property.
  • They can withdraw money from your bank accounts.


Debt Collection Laws in Canada: How Long Can a Debt Collector Pursue a Debt?

It’s wishful thinking to assume that if you ignore a debt collector, they will eventually give up. Debt regulations vary across Canada, so it’s crucial to familiarize yourself with your province’s rules. If no specific rules apply in your province, federal rules come into play. Federal regulations allow a debt collector to pursue collection or legal action against you for up to 6 years from the last payment.

When dealing with debt collectors, arm yourself with all the necessary information. Understand what a debt collector can and cannot do. Although there’s a period within which they can file a lawsuit or take you to court, this doesn’t mean your debt is forgiven. Some debts are exempt from these regulations, meaning they are perpetual.

Types of Debt with No Time Limitations

While this list isn’t exhaustive, here are some common types of debt that have no time limits:


  • Secured debts like mortgages and vehicle loans.
  • Unsecured debt where the creditor has a judgment against you.
  • Debt where the creditor has initiated a lawsuit against you before the limitation period expired.
  • Spousal or child support debt, including overdue payments.
  • Debt resulting from fraud, embezzlement, or misappropriation.
  • Court fines, like traffic violations.
  • Money owed to the government, such as tax debts.
  • Unsecured debt where the creditor has a judgment against you.


Can Debt Collectors Garnish Wages or Withdraw Money from Bank Accounts?

Yes, debt collectors can sue on behalf of creditors. If they win and secure a judgment against you, they can garnish your wages or withdraw money from your bank accounts. The extent of their actions and the amount they receive depend on your income, assets, and the amount of debt.

The “Right of Offset”: How Do Financial Institutions Collect Debt?

The “right of offset“, also known as the “right of set-off”, allows a financial institution to use any deposits by the debtor to offset any debts such as credit cards or loans. Most banks have a clause in their account agreements that grants them this right.

When a bank exercises its right of offset, it can withdraw money from your personal checking account to recover the money you owe. They don’t need your consent or knowledge because you agreed to this when you signed the agreement. If your account balance isn’t sufficient to cover the debt, they are not obligated to leave you with a positive balance.

This offset might leave you short of funds to cover other payments, leading to Non-sufficient funds (NSF) charges for each failed payment, thereby increasing your debt. This can apply to joint accounts as well.

Impact of Collection Activities on Credit Reports

Collection activities stay on your credit file for six years, starting from the date of your last payment, even if you’ve paid the full balance. Consequently, your credit score and your future borrowing abilities can be significantly impacted.

Stopping Collection Activities or Wage Garnishments

The best way to stop collection activities or wage garnishments is to pay the debt. But what if you can’t afford to?

A consumer proposal, administered by a Licensed Insolvency Trustee from Bankruptcy Canada, can halt all collection activities. It includes stopping wage garnishments, collection calls, and legal proceedings. A consumer proposal is a powerful tool that can eliminate the debt in collections and other included debt. It typically reduces debt to a fraction of the original amount.

A consumer proposal is legally binding on your creditors. It’s interest-free and can be paid over a five-year period. All types of creditors, including credit cards, bank loans, payday loans, can be included in a proposal.


Ignoring your creditors will not make your debt go away. Instead, it could complicate matters further. If you’re struggling with debt, seek help from a licensed professional. They can provide a FREE confidential consultation on how to deal with debt collectors.

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