How to Respond to a Statement of Claim for Debt in Canada

Mar 20, 202627 min read

You open your door and a stranger hands you an envelope. Or maybe it arrives by registered mail. Inside, you find official-looking court documents — a Statement of Claim. A creditor or collection agency is suing you for an unpaid debt. Your heart sinks. Panic sets in. What do you do?

What Is a Statement of Claim?

A Statement of Claim is a formal legal document filed with a court that initiates a lawsuit. It sets out who is suing you (the plaintiff), what they’re claiming (the amount owed plus interest and costs), and the basis for their claim (the debt, the contract, the default). In some provinces, the equivalent document is called a “Notice of Civil Claim” (BC), a “Originating Notice” or “Statement of Claim” (Alberta), or for smaller amounts, a “Plaintiff’s Claim” (Small Claims Court).

Types of Courts Where Debt Claims Are Filed

Court	Typical Claim Amount	Province-Specific Names	Lawyer Required?
Small Claims Court	Up to $25,000-$50,000 (varies by province)	Small Claims Court (ON), Civil Resolution Tribunal / Provincial Court Small Claims (BC), Provincial Court Civil Division (AB)	No — designed for self-representation
Superior Court	Over Small Claims limit	Superior Court of Justice (ON), Supreme Court (BC), Court of King’s Bench (AB)	Strongly recommended

typical deadline to file a defence in most Canadian provinces — missing it can mean automatic judgment against you

Small Claims Court Limits by Province

Province	Small Claims Court Limit
Ontario	$35,000
British Columbia	$5,000 (CRT) / $35,000 (Provincial Court)
Alberta	$50,000
Saskatchewan	$30,000
Manitoba	$15,000
Quebec	$15,000 (Small Claims Division)
Nova Scotia	$25,000
New Brunswick	$20,000
PEI	$16,000
Newfoundland & Labrador	$25,000

Good to Know

Small Claims Court Is Designed for Self-Representation

If the claim against you is in Small Claims Court (or its equivalent), the process is specifically designed to be accessible to people without lawyers. The forms are simpler, the rules are more relaxed, and the judges are accustomed to dealing with self-represented parties. Don’t be intimidated by the court process — thousands of Canadians successfully represent themselves in Small Claims Court every year.

Step-by-Step: What to Do After Being Served

Read the Documents Carefully

Read every page of the Statement of Claim. Note: who the plaintiff is (the creditor or collection agency suing you), the amount they’re claiming, the basis for the claim (which debt, which contract), the court where the claim was filed, the court file number, and the date you were served. Understanding these details is essential for your response.

Note Your Deadline

Your deadline to respond starts running from the date you were served. In most provinces, you have 20-30 days to file a defence (also called a “Statement of Defence” or “Defence”). The exact deadline depends on your province, the court, and how you were served. If you were served personally, the clock starts the day you received the documents. If served by mail, add extra days as specified by your province’s rules of court.

Don't Contact the Plaintiff Directly

Resist the urge to call the creditor or their lawyer to explain or negotiate. Anything you say can potentially be used against you. Instead, focus on understanding your legal options and preparing your formal response.

Assess Your Defences

Before writing your defence, consider what legitimate defences you might have (covered in detail below). The most common and powerful defence is the limitation period — if the creditor waited too long to sue, the claim may be time-barred.

Consider Getting Legal Advice

Even if you plan to represent yourself, a one-time consultation with a lawyer can be invaluable. Many lawyers offer initial consultations at reduced rates. Community legal clinics offer free services to low-income Canadians. Understanding your legal position before responding can make the difference between winning and losing.

File Your Defence

Prepare and file your Statement of Defence with the court before the deadline. You must also serve a copy on the plaintiff (or their lawyer). Filing and serving your defence preserves your right to contest the claim and prevents default judgment.

Consider a Consumer Proposal or Bankruptcy

If you have multiple debts and the lawsuit is just one piece of a larger financial problem, filing a consumer proposal or bankruptcy immediately stays (stops) the lawsuit and all other collection activity. This may be a better strategy than fighting the lawsuit alone.

Warning

The Deadline Is Real — Don’t Miss It

The deadline to file your defence is strictly enforced. If you miss it, the plaintiff can request default judgment without further notice to you. Once default judgment is entered, you’ll need to bring a motion to set it aside — which requires showing a reasonable excuse for the delay AND a defence with merit. It’s much harder to undo a default judgment than to file a defence on time. If you’re struggling to meet the deadline, contact the court clerk to ask about extensions, or file a basic defence to preserve your rights and then amend it later.

Response Deadlines by Province

Province	Court	Response Deadline	Special Notes
Ontario	Superior Court	20 days (served in Ontario)	40 days if served outside Ontario; 60 days outside Canada
Ontario	Small Claims Court	20 days	File a Defence at the Small Claims Court office
British Columbia	Supreme Court	21 days	File a Response to Civil Claim
British Columbia	Provincial Court (Small Claims)	14 days	File a Reply
Alberta	Court of King’s Bench	20 days	File a Statement of Defence
Alberta	Provincial Court (Civil)	20 days	File a Dispute Note
Saskatchewan	Court of King’s Bench	20 days	File a Statement of Defence
Manitoba	Court of King’s Bench	20 days	File a Statement of Defence
Quebec	Superior Court / Court of Quebec	15 days	File a Defence (contestation)
Nova Scotia	Supreme Court	20 days	File a Defence
New Brunswick	Court of King’s Bench	20 days	File a Statement of Defence

The Limitation Period Defence: Your Most Powerful Tool

The limitation period defence is the single most important defence available to Canadians sued for old debts. Every province has a limitation period — a maximum timeframe within which a creditor must file a lawsuit. If the creditor files after this period expires, you can raise the limitation defence, and the claim will be dismissed.

Clock and calendar representing the limitation period deadline for debt lawsuits in Canada — The limitation period is a strict deadline. If the creditor missed it, the entire claim can be dismissed.

Limitation Periods by Province

Province	Basic Limitation Period	Start Date (When Clock Begins)
Ontario	2 years	Date the claim was discovered (typically last payment or acknowledgment)
British Columbia	2 years	Date the claim was discovered
Alberta	2 years	Date the claim was discovered
Saskatchewan	2 years	Date the claim was discovered
Manitoba	6 years	Date the cause of action arose
Quebec	3 years	Date the right of action arose
New Brunswick	2 years (general) / 6 years (some debts)	Date the claim was discovered
Nova Scotia	2 years	Date the claim was discovered
PEI	6 years	Date the cause of action arose
Newfoundland & Labrador	2 years	Date the claim was discovered

the limitation period in most Canadian provinces — after this, creditors lose the right to sue

How to Determine If Your Debt Is Statute-Barred

Identify Your Province's Limitation Period

Use the table above to find your province’s basic limitation period. Most provinces use a 2-year period for general claims, which includes most consumer debts.

Determine When the Clock Started

The limitation clock typically starts on the date of the last payment or the last written acknowledgment of the debt. “Discovery” means when you knew or ought to have known that the creditor had a claim. For most debts, this is straightforward — it’s the date you stopped paying.

Check for Clock Resets

Certain actions can restart the limitation clock: making a partial payment (even a small one), signing a written acknowledgment of the debt, or making a written promise to pay. In Ontario, section 13 of the Limitations Act specifies that an acknowledgment restarts the clock. Be very careful about any communication with creditors for old debts — even a small payment can restart the limitation period.

Calculate the Deadline

Add the limitation period to the start date. If the Statement of Claim was filed after this deadline, the claim is statute-barred, and you have a strong defence.

Raise the Defence in Your Statement of Defence

The limitation defence is NOT automatic. You must raise it in your Statement of Defence. If you don’t raise it, the court will not apply it on its own. This is critically important — many people lose cases they should have won because they didn’t raise the limitation defence.

Warning

You MUST Raise the Limitation Defence — The Court Won’t Do It for You

This cannot be emphasized enough: the limitation period defence must be affirmatively raised in your Statement of Defence. If you don’t raise it — even if the claim is clearly outside the limitation period — the court will proceed as if the defence doesn’t apply, and you could lose. Include specific language in your defence: “The plaintiff’s claim is statute-barred pursuant to the [your province’s Limitations Act], as the cause of action arose more than [X] years before the claim was issued.”

Credit Resources Team — Expert Note

The limitation defence is by far the most common defence in debt collection lawsuits, and it’s incredibly effective when properly raised. I’ve seen hundreds of cases dismissed because the creditor waited too long to sue. But I’ve also seen cases where debtors had a perfectly valid limitation defence and lost because they either didn’t file a defence at all (resulting in default judgment) or failed to raise the limitation issue in their defence. Don’t let this happen to you — the limitation defence must be explicitly pleaded.

Filing Your Statement of Defence

Your Statement of Defence is your formal response to the plaintiff’s claim. It tells the court your side of the story and sets out the reasons why the plaintiff should not get what they’re asking for.

What to Include in Your Defence

A Statement of Defence for a debt claim should generally include the following elements:

Response to each allegation: Go through each paragraph of the Statement of Claim and either admit, deny, or say you have no knowledge of each allegation
Your defences: Set out every defence you’re relying on — limitation period, incorrect amount, debt already paid, wrong defendant, etc.
Any counterclaim: If you have a claim against the plaintiff (such as for harassment or violating collection laws), you can include it as a counterclaim
Request for relief: Ask the court to dismiss the claim, award you costs, and grant any other appropriate relief

Common Defences to Debt Claims

Defence	When It Applies	Strength
Limitation period expired	Creditor sued after the limitation period	Very strong — usually results in dismissal
Debt already paid	You have proof the debt was paid in full or settled	Strong — if you have documentation
Wrong amount	The claimed amount includes unauthorized charges or errors	Moderate — may reduce the judgment, not eliminate it
Wrong defendant	The debt isn’t yours (identity error, fraud)	Strong — if you can demonstrate it
No valid assignment	The collection agency can’t prove they own the debt	Moderate — forces plaintiff to prove chain of ownership
Unconscionable terms	The original contract had unfair terms	Weak — difficult to prove for standard consumer debts
Improper service	You weren’t properly served with the Statement of Claim	Procedural — may delay but not dismiss the claim
Consumer proposal or bankruptcy	You’ve filed a consumer proposal or bankruptcy	Very strong — stays the proceeding entirely

Sample Statement of Defence Framework

Here’s a general framework for a Statement of Defence in a debt claim. Adapt it to your specific situation and your province’s procedural requirements:

Court File No.: [from the Statement of Claim]

[Court Name]

BETWEEN:

[Plaintiff’s Name] — Plaintiff

and

[Your Name] — Defendant

STATEMENT OF DEFENCE

1. The Defendant denies the allegations contained in the Statement of Claim except as specifically admitted herein.

2. The Defendant states that the Plaintiff’s claim is statute-barred pursuant to the [Limitations Act of your province], as the cause of action arose more than [X] years before the Statement of Claim was issued.

3. [Additional defences as applicable — wrong amount, already paid, wrong defendant, etc.]

4. The Defendant requests that the Plaintiff’s claim be dismissed with costs.

Date: [Date]
[Your Name]
[Your Address]
[Your Phone Number]
[Your Email]

Pro Tip

File First, Refine Later

If your deadline is approaching and you’re not sure your defence is perfect, file what you have. A basic defence that preserves your right to contest the claim is infinitely better than missing the deadline. In most courts, you can amend your defence later with the court’s permission. The critical thing is to file something — anything — before the deadline expires.

How to File Your Defence: Practical Steps

Prepare Your Defence Document

Write your Statement of Defence following the framework above. Many courts provide fillable forms or templates on their websites. For Small Claims Court, the forms are usually very straightforward. For Superior Court, the format is more formal but still manageable for self-represented parties.

Make Copies

You need at least three copies: one for the court, one for the plaintiff (or their lawyer), and one for yourself. Some courts require additional copies. Check with the court clerk.

File With the Court

Take your copies to the court clerk’s office (the same court identified on the Statement of Claim). The clerk will stamp your copies with the filing date and assign a file number if one hasn’t been assigned. You’ll need to pay a filing fee — typically $50-$200 for Superior Court and less for Small Claims Court. If you cannot afford the fee, ask about a fee waiver.

Serve the Plaintiff

After filing with the court, you must serve a copy of your defence on the plaintiff or their lawyer. The method of service depends on your province’s rules — it may be by mail, email, fax, or personal service. Service by mail is usually sufficient for a defence (unlike the Statement of Claim, which often requires personal service). Keep proof of service.

File Proof of Service

Some courts require you to file an affidavit of service or proof of service showing that you served the plaintiff. Check your court’s requirements and file this document if necessary.

Counterclaims: When the Creditor Has Wronged You

In some cases, the creditor or collection agency’s behaviour may give you grounds for a counterclaim — a claim you make against them within the same proceeding. Common grounds for counterclaims in debt cases include:

Collection Law Violations

If the creditor or their collection agency violated provincial collection laws — through harassment, threats, unauthorized contact, or misrepresentation — you may have a counterclaim for damages. Provincial consumer protection statutes often provide for penalties and damages when collection laws are violated.

Breach of Contract by the Creditor

If the creditor breached the original agreement — for example, by unilaterally increasing your interest rate beyond what the contract allowed, by failing to provide required disclosures, or by applying payments incorrectly — you may have a counterclaim for the resulting damages.

Negligence in Credit Reporting

If the creditor reported inaccurate information to the credit bureaus, causing you financial harm (such as being denied credit), you may have a counterclaim for negligence.

Good to Know

Counterclaims Can Be Strategic

Even if your counterclaim won’t result in a large damages award, it can be strategically valuable. A counterclaim signals to the plaintiff that you’re prepared to fight, which may motivate them to settle the case on favourable terms. It also increases the plaintiff’s litigation costs, which may make them reconsider whether the lawsuit is worth pursuing.

Mediation: Resolving the Dispute Without Trial

Many Canadian courts require or encourage mediation before a case goes to trial. Mediation is a process where a neutral third party (the mediator) helps you and the plaintiff negotiate a settlement. It’s less formal than a trial, less expensive, and often more satisfying for both parties.

How Mediation Works in Debt Cases

A mediator is assigned or chosen by the parties
Both parties (or their lawyers) attend a mediation session
The mediator facilitates discussion and negotiation — they don’t make decisions
If a settlement is reached, it’s put in writing and becomes binding
If mediation fails, the case proceeds to trial

Advantages of Mediation

Advantage	Explanation
Cost	Much less expensive than a trial — mediator fees are shared between parties
Speed	Mediation can be scheduled within weeks; trials can take months or years
Flexibility	You can negotiate creative solutions (payment plans, reduced amounts) that a court can’t order
Privacy	Mediation is confidential; trial is public record
Control	You participate in creating the solution rather than having one imposed by a judge

Credit Resources Team — Expert Note

In my experience mediating debt disputes, about 75% of cases settle at mediation. Creditors often prefer a negotiated settlement because it guarantees them some recovery without the cost and uncertainty of trial. Debtors benefit because they can negotiate payment terms they can actually manage. The key to successful mediation is coming prepared — know what you can afford, know your defences, and be willing to compromise.

Mandatory Mediation

In Ontario, mandatory mediation applies to certain civil cases in Toronto, Ottawa, and Windsor (under Rule 24.1 of the Rules of Civil Procedure). In other provinces, mediation may be voluntary or mandatory depending on the court and the type of case. Even when mediation isn’t mandatory, most courts will accommodate a request for mediation from either party.

of debt disputes that go to mediation are resolved without trial

Default Judgment: The Consequence of Doing Nothing

This section exists because the single most common mistake Canadians make when served with a Statement of Claim is doing nothing. They’re overwhelmed, embarrassed, or simply don’t know what to do — so they ignore the documents. This leads to default judgment, which is the worst possible outcome.

Person looking worried while reading legal documents about default judgment consequences — Default judgment is the automatic consequence of not responding to a Statement of Claim. It gives the creditor everything they asked for.

What Is Default Judgment?

Default judgment is a court order entered against you without a trial, solely because you failed to file a defence within the required timeframe. It gives the plaintiff exactly what they asked for in their Statement of Claim — the full amount of the debt, plus interest, plus legal costs.

How Default Judgment Happens

You're Served and Don't Respond

The Statement of Claim is served on you. The response deadline passes. You don’t file a defence.

Plaintiff Requests Default

The plaintiff (or their lawyer) files a Request for Default Judgment with the court. They provide proof that you were served and that no defence was filed within the deadline.

Judgment Is Entered

The court enters judgment against you for the claimed amount, plus interest, plus costs. In some cases, the plaintiff must attend before a judge to have damages assessed; in others (particularly for liquidated claims like a specific debt amount), judgment is entered administratively by the court clerk without a hearing.

Enforcement Begins

With a judgment in hand, the creditor can now enforce it. This means: garnishing your wages (up to 20-50% of your net pay depending on the province), seizing funds from your bank account, placing a lien on your property (preventing you from selling without paying the judgment), and potentially seizing and selling your non-exempt assets.

Warning

Default Judgment Is Devastating

A default judgment is not just a piece of paper. It’s a powerful legal tool that gives creditors the ability to take money directly from your paycheck, freeze your bank accounts, and place liens on your property. In Ontario, a judgment is enforceable for up to 6 years and can be renewed for another 6 years. In Alberta, it’s enforceable for 10 years and renewable for another 10. The effects of a default judgment can follow you for decades.

Can You Set Aside a Default Judgment?

Yes, but it’s much harder than simply filing a defence on time. To set aside (reverse) a default judgment, you must bring a motion before the court and generally demonstrate:

A reasonable excuse for the delay: You didn’t receive the documents, you were ill, you didn’t understand the legal process, etc.
A defence on the merits: You have a legitimate defence that could succeed at trial (such as the limitation period defence)
No prejudice to the plaintiff: Setting aside the judgment won’t unfairly harm the plaintiff
You acted promptly: Once you learned about the default judgment, you moved quickly to address it

Courts generally prefer to decide cases on their merits rather than on procedural defaults, so motions to set aside default judgments are often granted — but there’s no guarantee. The process costs time and money, and you may need to pay the plaintiff’s costs for the default judgment motion. It’s always better to file your defence on time.

“

The single worst thing you can do when served with a Statement of Claim is nothing. Even a basic, imperfect defence filed on time is infinitely better than default judgment.

The Nuclear Option: Consumer Proposal or Bankruptcy

If the lawsuit is part of a larger debt problem — if you owe money to multiple creditors and the lawsuit is just the most urgent symptom — filing a consumer proposal or bankruptcy may be the best response. Here’s why:

The Stay of Proceedings

When you file a consumer proposal or bankruptcy with a Licensed Insolvency Trustee, an automatic stay of proceedings takes effect immediately. This stay:

Stops all lawsuits against you (including the current one)
Stops all garnishment of wages
Stops all collection calls and letters
Prevents creditors from seizing assets
Freezes interest on unsecured debts

The stay is extremely powerful — it halts all creditor action in its tracks, giving you breathing room to address your debts through a structured process. Unlike filing a defence to a lawsuit (which only addresses one creditor), a consumer proposal or bankruptcy deals with all your debts at once.

Consumer Proposal vs. Bankruptcy: Quick Comparison

Factor	Consumer Proposal	Bankruptcy
Effect on lawsuit	Stays (stops) the proceeding	Stays (stops) the proceeding
Debt reduction	Negotiate to pay a portion (typically 20-50%)	Most unsecured debts discharged entirely
Assets	You keep all your assets	Non-exempt assets go to creditors
Credit report impact	R7 for 3 years after completion	R9 for 6-7 years after discharge
Payment	Fixed monthly payments up to 5 years	Surplus income payments for 9-21 months
Creditor agreement needed	Yes — majority vote of creditors	No — automatic upon filing

Ready to Take Control of Your Credit?

Join 10,000+ Canadians who started their credit journey with Credit Resources.

GET STARTED NOW

No Hard Check Cancel Anytime $20/week

Settlement After Being Sued: It’s Still Possible

Even after a lawsuit has been filed, settlement is always an option. In fact, many lawsuits are filed specifically to motivate the debtor to negotiate — the creditor would rather settle than go through the expense of a trial.

Settlement Tips After Being Sued

File your defence first: Always file your defence before negotiating settlement. This protects you from default judgment and shows the creditor you’re prepared to fight, which strengthens your negotiating position.
Make a reasonable offer: The creditor has already invested in legal costs. Your settlement offer should reflect this — they may be less flexible than they were before the lawsuit.
Use your defences as leverage: If you have a strong limitation defence, the creditor knows they might lose at trial. This gives you significant leverage in settlement discussions.
Get the settlement in writing: If you reach a settlement, ensure it’s documented in a formal settlement agreement and that the lawsuit is formally discontinued.
Consider consent to judgment with terms: In some cases, you can agree to a judgment (acknowledging you owe a reduced amount) with payment terms. This gives the creditor security while giving you manageable payment terms.

Credit Resources Team — Expert Note

I always tell people: the best time to settle is after you’ve filed your defence. Before that, the creditor has all the leverage — they can get default judgment if you don’t respond. After you file your defence, the dynamics shift. Now the creditor faces the prospect of a trial, with all its costs and uncertainties. If you have a limitation defence or any other strong defence, the creditor’s risk increases dramatically, and they become much more willing to negotiate a favourable settlement.

Legal Resources for Self-Represented Parties

If you can’t afford a lawyer, there are resources available to help:

Free Legal Resources by Province

Province	Free Legal Resource	Services Offered
Ontario	Legal Aid Ontario; Community Legal Clinics; Pro Bono Ontario	Free legal advice and representation for qualifying individuals
British Columbia	Legal Aid BC; Access Pro Bono; People’s Law School	Free legal advice, clinics, and educational resources
Alberta	Legal Aid Alberta; Calgary Legal Guidance; Edmonton Community Legal Centre	Free legal services for qualifying individuals
Quebec	Commission des services juridiques (Legal Aid)	Free legal services for qualifying individuals
All Provinces	Canadian Bar Association Lawyer Referral Service	Free or low-cost initial consultations
All Provinces	JusticeNet (for middle-income Canadians)	Reduced-fee legal services

Pro Tip

Court Staff Can Help With Procedure

Court clerks cannot give you legal advice, but they can help you with procedural questions: how to file your defence, what forms to use, what fees to pay, and how to serve documents. Don’t hesitate to ask the court clerk for help — they deal with self-represented parties every day and can guide you through the administrative process.

After Filing Your Defence: What Happens Next

Once you’ve filed your defence, the lawsuit enters the next phase. Here’s what to expect:

Discovery (Superior Court)

In Superior Court cases, both parties exchange documents and may conduct examinations for discovery (depositions where you answer questions under oath). For most debt cases, discovery is relatively straightforward — the creditor will ask about the debt, your payments, and your current financial situation.

Pre-Trial Conference

Before trial, most courts schedule a pre-trial conference where a judge meets with both parties to discuss the case and encourage settlement. This is often when debt cases get resolved — the judge’s feedback about the strength of each side’s case motivates realistic settlement negotiations.

Trial

If the case doesn’t settle, it goes to trial. In Small Claims Court, trials are relatively informal — you present your case to a judge, who makes a decision. In Superior Court, trials are more formal but follow the same basic structure: the plaintiff presents their case, you present your defence, and the judge makes a decision.

Timeline

From filing to trial can take 6 months to 2+ years depending on the court, the province, and the complexity of the case. Small Claims Court cases tend to be faster. During this entire time, settlement is always possible and encouraged.

Frequently Asked Questions

If you weren’t properly served according to your province’s rules of civil procedure, you may have grounds to challenge any default judgment that was entered. Proper service typically requires personal service (the documents were handed to you directly) or substituted service (the court authorized an alternative method, such as mail or email). If you learn about a lawsuit or judgment against you and believe you weren’t properly served, consult with a lawyer immediately. Improper service can be grounds to set aside a default judgment.

Yes. At any point before judgment, you can pay the claimed amount (including interest and the plaintiff’s legal costs to date) and the lawsuit will be discontinued. However, before paying, consider whether you have defences (like the limitation period) that could eliminate or reduce the amount you owe. Paying without exploring your defences may mean paying more than you legally owe.

Owing the money and being able to pay it are two different things. Even if you acknowledge the debt, you can still negotiate the amount, request a payment plan, or pursue formal insolvency relief (consumer proposal or bankruptcy). Filing a defence preserves your options while you explore the best path forward. A defence doesn’t have to claim you don’t owe the money — it can raise other defences like limitation period, incorrect amount, or simply preserve your ability to negotiate.

Filing fees vary by court and province. In Ontario Small Claims Court, the filing fee for a defence is approximately $40-$55. In Ontario Superior Court, it’s approximately $144-$180. Alberta Provincial Court is approximately $75, and Court of King’s Bench is approximately $200. Many courts offer fee waivers for people who cannot afford the fee — ask the court clerk about this option. If you represent yourself, the filing fee may be your only cost.

It depends on the amount and complexity. For Small Claims Court cases (under $35,000 in most provinces), self-representation is common and the court is designed for it. For Superior Court cases (larger amounts), legal representation is strongly recommended. Even if you plan to represent yourself, a one-time consultation with a lawyer ($200-$500) can help you understand your defences and prepare your response. Many community legal clinics offer free services to qualifying individuals.

Yes. If a collection agency purchased the debt (as opposed to just being hired to collect it), they become the legal owner of the debt and can sue in their own name. However, they must be able to prove the chain of ownership — that the debt was properly assigned from the original creditor to them. In your defence, you can challenge the assignment and require the collection agency to prove they have standing to sue. If they can’t prove they own the debt, their claim may be dismissed.

Yes. A judgment allows the creditor to apply for a garnishment order, which directs your employer to withhold a portion of your wages and pay it to the creditor. The amount that can be garnished varies by province — typically 20-30% of your net wages. Certain types of income are exempt from garnishment, including social assistance, EI benefits, CPP/OAS, and some pension income. If a garnishment order is issued, consult with a Licensed Insolvency Trustee about whether a consumer proposal or bankruptcy could stop it.

A demand letter is NOT a court document. It’s a letter from a creditor or their lawyer asking you to pay. You are not required to respond to a demand letter within any legal deadline, and ignoring it does not result in default judgment. A Statement of Claim is an official court document that has been filed with a court and has a court file number. Ignoring a Statement of Claim DOES have legal consequences. Always check whether the document has a court file number and was issued by a court — if it doesn’t, it’s likely a demand letter, not a court proceeding.

Taking Action: Your Response Plan

If you’ve been served with a Statement of Claim, here’s your action plan:

Don’t panic. Being sued is stressful but not the end of the world.
Read the documents. Understand who’s suing you, for how much, and in which court.
Note your deadline. Mark it on your calendar and set reminders.
Check the limitation period. This could be your strongest defence.
Get advice if possible. A lawyer, legal clinic, or Licensed Insolvency Trustee.
File your defence BEFORE the deadline. Even a basic defence is better than nothing.
Explore settlement. After filing your defence, consider negotiating.
Consider the bigger picture. If this is part of a larger debt problem, a consumer proposal or bankruptcy may be the best overall solution.

Ready to Take Control of Your Credit?

Join 10,000+ Canadians who started their credit journey with Credit Resources.

GET STARTED NOW

No Hard Check Cancel Anytime $20/week

You have more power in this situation than you think. The legal system has protections for defendants, defences are available, and creditors often prefer to settle rather than go to trial. But none of these protections work unless you take action. File your defence, know your rights, and take control of the process. Your financial future is worth fighting for.

How to Respond to a Statement of Claim for Debt in Canada