proof of debt

A question about proving debt

ii8Bit asks on Reddit:

Been looking to speak to someone like you!

My question: is it the same in Canada as the US. Where if you write a letter to a debt collector requesting proof of debt owed, they have to get back to you with proof, and if they can’t it’s wiped clean?


Victor Fong, Licensed Insolvency Trustee in Toronto, Canada replies:

Hi ii8Bit,

I don’t think that it’s that simple – at least not in Canada. There would be a number of steps one would need to take to achieve that same result:

You’re contacted by a collection agency asserting that you owe debt. You don’t pay it, either because you’re unwilling or unable;

The agency subsequently sues you for the debt by taking you to small claims court. At court, you can challenge the existence of the debt. And if the agency cannot produce proof of the debt (e.g., signed loan agreement or credit card agreement), then the court will dismiss the agency’s motion against you.

So just writing a letter to an agency for proof of the debt won’t prohibit them from taking collection action against you if they don’t happen to have the paperwork. The matter would have to go to small claims court. But if the above scenario plays out in your favour, then the debt is effectively “wiped clean” because the creditor cannot enforce its collection.