Yes, a collection agency can sue you in Ontario Small Claims Court, generally once it has authorization from the original creditor whose debt it is trying to collect. Being served with a Statement of Claim is legally different from receiving a collection call or letter, and it carries a strict, short deadline to file a defence. Common defences include the debt being past Ontario's two-year limitation period, the amount being incorrect, or the debt not actually belonging to you. Ignoring a Statement of Claim risks a default judgment being entered against you.
- A collection agency can sue you, generally once it has the original creditor's authorization, often in Small Claims Court for smaller debts.
- A Statement of Claim is legally different from a collection call or letter — it starts a court case with a strict, short deadline to respond.
- Ontario's two-year limitation period is one of the most important defences — a debt that is too old to sue on can be a complete defence even if you genuinely owe it.
- Making a payment or acknowledging an old debt can restart the limitation clock — be careful about what you say or pay before getting advice.
- Collection agencies must be registered and follow the Collection and Debt Settlement Services Act, including notice requirements before contacting you.
- Ignoring a Statement of Claim does not make it go away — it risks a default judgment being entered against you without your side ever being heard.
The Short Answer
Yes, a collection agency can sue you, and for smaller debts, Small Claims Court is exactly where it happens. The critical thing to understand is the difference between the collection calls and letters you may have already received and an actual lawsuit — they are not the same thing, and treating a real Statement of Claim like just another collection notice is how people end up with a default judgment they never even got to contest.
Who Actually Sues You
Once a collection agency has authorization from the original creditor — the bank, lender, or business that says you owe them money — it, or a lawyer or paralegal acting on its behalf, can commence a court case against you. For debts within the Small Claims Court monetary limit, this is the venue the claim is typically brought in, following the same basic process described in our guide on steps to sue in Small Claims Court — except this time, you are the defendant.
A Statement of Claim Is Not a Collection Call
A collection call or letter is exactly that — a request for payment, with no court involvement yet. A Statement of Claim is a formal court document, issued by the court and properly served on you, that starts an actual lawsuit with a specific, short deadline to file a defence. Confusing the two — assuming a court document is just another collection letter to be ignored, or assuming a collection letter carries the same legal weight as a court claim — causes real, avoidable problems in both directions.
If you receive a document and are unsure whether it is a genuine lawsuit, look for a court file number and the name of the court. A real Statement of Claim will have both. When in doubt, have it reviewed quickly — the response deadline is short and does not pause while you figure this out.
The Two-Year Limitation Period Defence
One of the most important defences to a collection agency lawsuit is Ontario's general two-year limitation period: a creditor generally must sue within two years of when it knew, or reasonably ought to have known, about the debt. Our guide on how long you have to sue someone in Ontario explains how this clock generally works. A debt that is genuinely past this period can be a complete defence, even where the underlying debt was once perfectly valid.
Be careful about what you say or pay regarding an old debt before getting advice — acknowledging the debt, or making even a small payment, can potentially restart the limitation clock, undoing what might otherwise have been a strong defence.
Other Common Defences
- Incorrect amount — disputing the balance, interest calculations, or fees claimed.
- Mistaken identity — the debt does not actually belong to you, which happens more often than people expect with purchased or bundled debt portfolios.
- Already paid or settled — the debt was resolved previously and the records are outdated.
- Procedural defects — including whether the agency was properly registered and complied with notice requirements under the Collection and Debt Settlement Services Act before pursuing the claim.
What Not to Do
Do not ignore a genuine Statement of Claim hoping it goes away — see our guide on default judgment in Ontario Small Claims Court for what happens when a defendant simply does nothing. Also avoid making promises, partial payments, or admissions about an old debt before you have assessed whether a limitation defence might apply — these can do real, irreversible damage to a case you might otherwise have won.
What to Do If You Are Served
Note the deadline on the claim immediately, and move quickly — these deadlines are short and strictly enforced. Review whether the debt, the amount, and the timing all actually check out, and consider whether a counterclaim might even be appropriate in some circumstances. If you lose and a judgment is entered, understand what enforcement can look like, including a writ of seizure and sale — and if more than one agency or creditor is involved, see our guide on multiple defendants in Small Claims Court. Property-related disputes that come up alongside a debt, such as a creditor holding property you believe is yours, or a debt tied to a municipal account, raise their own distinct issues worth reviewing separately. Call 416-274-2222 for a free, confidential consultation before your deadline passes.
Frequently Asked Questions
They can sue. Once authorized by the original creditor, a collection agency — or a lawyer or paralegal acting for it — can start a Small Claims Court case against you for the debt, generally where the amount falls within the court's monetary limit.
A genuine lawsuit arrives as a court document, typically called a Statement of Claim, issued by the court and formally served on you — it looks very different from a collection letter and will reference a specific court file. If you are unsure, check the document for a court file number and the court's name, or get it reviewed quickly.
Generally two years from the date you knew, or reasonably ought to have known, that you owed the debt and who the creditor was. A debt that is older than this can potentially be defended on the basis that the claim is time-barred, even if the underlying debt was once valid.
It can, in some circumstances — a payment or a clear acknowledgment of the debt can be treated as restarting the limitation period. If you believe a debt may be past the limitation period, get advice before making any payment or statement about it.
If you do not respond within the deadline set out in the claim, the agency can ask the court for a default judgment against you — a judgment entered without your side being heard at all, which is then just as enforceable as one obtained after a full hearing.
Collection agencies are generally required to be registered and to comply with the Collection and Debt Settlement Services Act, including giving required notice before contacting a debtor. Whether every type of debt purchaser must specifically register as a "collection agency" has been a genuinely contested legal question in some cases, so this is worth raising with a lawyer if it is relevant to your defence.
Yes. If you believe the amount is wrong — due to incorrect interest calculations, fees you dispute, or a balance that does not match your own records — that is a legitimate basis to file a defence and put the agency to the task of proving the exact amount owed.