Sued for Debt in Ontario: A Homeowner’s Guide to Your Options
Being served with a Statement of Claim over a debt does not mean you have lost. It means a legal process has started, and that process has rules that can work in your favour. Here is how debt lawsuits work in Ontario and where you have leverage.
1. The clock starts the day you are served
A debt lawsuit in Ontario begins when the creditor issues a Statement of Claim and serves it on you. If you were served in Ontario, you generally have 20 days to serve and file a Statement of Defence. Delivering a Notice of Intent to Defend within that window buys you an extra 10 days to prepare your defence.
2. Know which court you are in
Where the case lives depends on the amount. As of October 1, 2025, Ontario’s Small Claims Court handles claims up to $50,000; anything above that proceeds in the Superior Court of Justice, which is more formal and more expensive. Small Claims is designed to be more accessible, but the deadlines and consequences are just as real.
3. Your realistic options
When you are sued for a debt, you generally have four paths:
Defend the claim
You dispute all or part of what is claimed. Common, genuine defences include an expired limitation period, the creditor failing to prove it actually owns the debt (common when a collection agency has bought it), an incorrect amount, or payments not credited.
Negotiate a settlement
Many claims resolve for less than the amount demanded, or on a payment plan, especially once a defence has been filed and the creditor faces the cost and risk of proving its case.
Consider a formal insolvency process
A consumer proposal or bankruptcy through a Licensed Insolvency Trustee is a separate, regulated path that can stop most lawsuits. Spingos Law does not provide insolvency services, but a legal review can help you understand whether that route is even relevant to your situation.
Do nothing — the worst option
Ignoring the claim almost always leads to default judgment and enforcement. It forfeits every defence you might have had.
4. What a judgment actually means for a homeowner
If a creditor obtains a judgment, it can enforce it. Enforcement tools in Ontario include:
- Wage garnishment — generally up to 20% of your net wages under the Wages Act (more for support debts).
- Garnishing a bank account — a court order directing your bank to pay funds to the creditor.
- A writ of seizure and sale of land — registered against your property, it creates a lien that typically must be paid out when you sell or refinance.
- Examination of the judgment debtor — you can be ordered to answer questions, under oath, about your income and assets.
None of these happen overnight, and none happen at all if the claim is defended or settled first. That sequence — sue, judgment, then enforcement — is exactly why acting during the 20-day window is so valuable for a homeowner.
5. Where homeowners have leverage
Home equity cuts both ways. It is what a creditor may ultimately pursue, but it is also what gives you room to resolve a claim on your terms — by defending, settling, or restructuring before a judgment and a writ ever enter the picture. The right strategy depends entirely on your facts: who is suing, for how much, how old the debt is, and what you own.
Frequently asked questions
- How long do I have to respond to a debt lawsuit in Ontario?
- If you were served in Ontario, you generally have 20 days to serve and file a Statement of Defence. Delivering a Notice of Intent to Defend within that period adds 10 days. Miss the deadline and the creditor can have you noted in default.
- Can a creditor take my house for an unsecured debt?
- Not automatically. A creditor must first sue, win a judgment, and then enforce it. One enforcement tool is a writ of seizure and sale registered against your property, which can create a lien. This is why responding early matters for homeowners.
- Should I just ignore the claim if I cannot pay?
- No. Ignoring a Statement of Claim usually leads to a default judgment for the full amount, after which the creditor can garnish wages, freeze accounts, or register against your home. Even if you owe the money, responding preserves options to dispute the amount or negotiate.
- Is it worth getting a lawyer for a debt claim?
- Often yes. A lawyer can identify defences such as an expired limitation period, force the creditor to prove it owns the debt, and negotiate a settlement. For homeowners with equity at risk, early advice frequently protects more than it costs.
Sources
Ontario Rules of Civil Procedure (Reg. 194, rr. 18, 19) · Small Claims Court, Ministry of the Attorney General · Limitations Act, 2002 · Wages Act. This guide is general information for Ontario, not legal advice.