Unpaid invoice or debt — Canada: how to get paid

Steps to Recover Money Owed in Canada

Canada has no single national "injonction de payer" equivalent. Debt recovery is governed province by province, each with its own court, monetary threshold, filing fee, and limitation period. The general process, however, follows the same logical sequence regardless of jurisdiction.

1. Document the debt. Gather your contract, invoices, purchase orders, emails, text messages, bank transfers, and any acknowledgment of the debt in writing. Evidence is the foundation of every step that follows.
2. Attempt friendly resolution (relance amiable): phone call or email reminder.
3. Send a formal demand letter (mise en demeure) by registered mail or process server.
4. File a court claim — Small Claims Court (or equivalent) for amounts under the provincial threshold; Superior/Queen's Bench/King's Bench for higher amounts.
5. Obtain a judgment and, if necessary, enforce it (wage garnishment, bank seizure, writ of seizure and sale of property).

Critical preliminary check — Limitation period: The limitation period varies by province, typically between two and six years, and begins running from the last payment made or the last written acknowledgment of the debt. As of 2024, six years is the maximum across Canada — no province allows more — and several provinces have much shorter limits. Six provinces have 2-year limitation periods, one province has 3 years, and five jurisdictions have 6 years. Once a debt is statute-barred, it cannot be enforced in court. Always verify the applicable period for your debtor's province before acting. The official source is your province's Limitations Act (e.g., Limitations Act, 2002, S.O. 2002, c. 24, Sched. B for Ontario; Limitation Act, S.B.C. 2012, c. 13 for British Columbia).

Friendly Follow-Up (Relance Amiable)

Before any legal step, make a genuine effort to resolve the matter directly. Courts in all provinces look favourably on creditors who can demonstrate they attempted an amicable resolution before filing.

• Phone call or email reminder — as soon as the invoice becomes overdue. Keep a dated log of every attempt.
• Second reminder at 15 days overdue — restate the amount, the due date that was missed, and any late-interest clause in the contract.
• Final reminder at 30 days overdue — clearly state that if payment is not received within a specific deadline (e.g., 7 days), you will proceed with a formal demand letter.
• Send all communications in a traceable format (email with read receipt, or registered mail) so you have proof of delivery.
• If a contractual late-interest rate applies (e.g., 2% per month as stated in your invoice terms), invoke it in writing at this stage — it creates pressure and establishes the accrual date.

Many debts — especially B2B — are settled at this stage. A formal demand letter is costlier and more adversarial; exhaust friendly channels first.

Formal Demand Letter (Mise en Demeure)

A formal demand letter is a legal prerequisite in several provinces and is always strategically important: it fixes the date from which interest begins to run, it signals seriousness, and it becomes evidence in court.

What it must contain

• Full identity of the creditor: name, address, and, for a business, its legal name and registration number.
• Full identity of the debtor: name and address as they appear on the contract or invoice.
• Precise description of the debt: invoice number(s), date(s), nature of goods or services delivered, and the total principal amount.
• Legal or contractual basis: reference the contract, purchase order, or applicable legislation (e.g., Sale of Goods Act, provincial equivalent).
• Calculation of interest: apply the contractual rate if agreed, or the applicable provincial legal rate (see "Costs and Timelines" section below). State the daily or monthly accrual.
• Clear and firm deadline for payment: typically 10 to 30 days from the date of the letter. A deadline of 10 to 30 days is standard practice.
• Statement of intended consequences: clearly state that failure to pay will result in court proceedings without further notice, and that the debtor will be liable for court costs and legal fees.
• Payment instructions: bank transfer details, cheque payable to, etc.
• Date and signature of the creditor or their authorized representative.

How to send it

Send the demand letter by registered mail and keep a copy along with the registered mail receipt as proof of delivery — it will be evidence that you attempted to resolve the matter before resorting to court. You may also use a bailiff (process server / huissier in Quebec) for a stronger legal effect, particularly for amounts above $10,000.

Quebec-specific rule

In Quebec, a formal demand in writing (mise en demeure) is required before claiming interest under the Civil Code of Québec (art. 1594–1600 C.C.Q.) unless the debtor is already in default by the terms of the contract (e.g., a fixed payment date has passed). The official government resource is quebec.ca — Justice and civil status.

Court Proceedings: Small Claims Court and Its Equivalents

Canada has no federal "injonction de payer" (payment order) procedure. The functional equivalent — a simplified, accessible, low-cost money judgment — is Small Claims Court (or its provincial equivalent). Each province administers its own system.

Monetary limits by province/territory

Important: Monetary limits are updated by provincial regulation and may change. Always confirm the current threshold on the official court website before filing. For claims above the small claims limit, you must file in the Superior Court / Court of Queen's or King's Bench, which involves significantly higher procedural complexity and costs.

Step-by-step filing process (general)

1. Obtain the claim form from the court registry or the court's official website (most provinces now offer online filing).
2. Complete the form: identify all parties, state the amount claimed, describe the facts briefly and clearly, and attach copies of supporting documents (contract, invoices, demand letter, proof of delivery).
3. Pay the filing fee at the court registry (amounts vary by province and claim size — see "Costs and Timelines" below).
4. Serve the claim on the defendant: methods vary by province (registered mail, process server, personal service). Strict rules apply — follow them exactly or the claim may be dismissed.
5. Attend the hearing: bring all original documents, a clear summary of your facts, and any witnesses. Judges in small claims courts are used to self-represented parties and will guide the proceeding.
6. Obtain the judgment: if the defendant does not appear or has no valid defence, you may obtain a default judgment. Otherwise, the judge will rule after hearing both sides.
7. Enforce the judgment: a judgment is not automatic payment — you may need to use enforcement tools (garnishment of wages, seizure of bank account, writ against real property).

Claims above the small claims limit

For amounts exceeding the provincial small claims ceiling, file in the Superior Court of Justice (Ontario), Court of King's Bench (Alberta, Manitoba, Saskatchewan, New Brunswick), Supreme Court of British Columbia, or the equivalent in your province. These courts have Simplified Procedure rules for claims up to a higher threshold (e.g., up to $200,000 under Ontario's Rule 76), which reduces some complexity. Legal representation is strongly recommended at this level.

Costs and Timelines

Filing fees

Fees are updated regularly. Always verify the exact amount on the official court website before filing. Filing fees are generally recoverable as part of the judgment if you win.

Legal interest rates on unpaid debts

The rate of interest you can claim depends on the contract and the province:

• Contractual rate: if your invoice or contract specifies a late-payment interest rate (e.g., 1.5% per month), that rate applies — provided it does not exceed the criminal interest rate ceiling under section 347 of the Criminal Code (currently an effective annual rate of 60%).
• Quebec legal rate (no contractual rate): if no rate is indicated in the contract, you can claim interest at the legal rate of 5%, plus the additional indemnity provided for by law. The additional indemnity (indemnité additionnelle) is set annually by the Minister of Revenue of Quebec.
• Ontario (Courts of Justice Act, s. 128–130): pre-judgment interest is calculated at the rate set quarterly by the Ministry of the Attorney General. For 2024, this has been in the range of 5–8% per annum. Verify the current rate at ontario.ca — Courts of Justice Act.
• Federal (Federal Courts Act): post-judgment interest follows provincial rates for causes of action arising in that province.
• Other provinces: consult the province's Judgment Interest Act or equivalent. Rates typically range from 2% to 5% per annum when no contractual rate is specified.

Typical timelines

Filing a lawsuit in Canada can cost upwards of $10,000 in legal fees for full litigation; creditors generally only pursue court action when the debt is large enough to justify legal costs, the debtor has assets or income that can be seized, and the debt falls within the province's statute of limitations. For small amounts, small claims court — where legal representation is optional and often unnecessary — keeps costs proportionate.

FAQ

Is there a federal "injonction de payer" (payment order) procedure that applies across all of Canada?

No. Canada has no single national equivalent to the French injonction de payer or the European order for payment. Debt recovery through the courts is an exclusively provincial and territorial matter. Each province has its own simplified court procedure — universally called Small Claims Court (or "Division des petites créances" in Quebec) — that functions as the practical equivalent: a streamlined, relatively inexpensive way to obtain a binding money judgment without complex procedure. For federally regulated matters (e.g., debts owed to the federal Crown), the Federal Courts Act and the Financial Administration Act apply, but these do not create a simple payment-order mechanism for private creditors.

What happens if my claim exceeds the small claims court limit?

If your claim exceeds the limit, you must either reduce your claim to fit within it (abandoning the excess), or file in a higher court with more complex procedures and higher costs. For example, if your claim is $52,000 in Ontario (limit: $50,000), you may choose to abandon $2,000 and claim the maximum in Small Claims Court, avoiding the much higher costs and complexity of the Superior Court. You cannot split a single claim into multiple smaller claims to circumvent the limit. For amounts above the small claims threshold, consider the Superior Court's Simplified Procedure (Ontario Rule 76, up to $200,000) or the equivalent streamlined track in your province.

Can I claim interest on top of the principal amount owed?

Yes — in all provinces. If your contract or invoice specifies a late-payment interest rate, that rate applies (subject to the criminal rate ceiling under s. 347 of the Criminal Code). You can also claim interest on the amount of your claim; the interest is generally calculated at the rate set in the contract between the parties. If no contractual rate was agreed, the applicable provincial legal rate applies: in Quebec, for instance, you can claim interest at the legal rate of 5%, plus the additional indemnity provided for by law. In Ontario, the Courts of Justice Act sets pre-judgment interest rates quarterly. Always specify your interest claim on the court filing form, including the start date and the daily accrual amount.

What do I do if I win in court but the debtor still does not pay?

A court judgment is a legal entitlement to payment — it does not guarantee automatic collection. If the debtor refuses or fails to pay after judgment, you have several enforcement tools available in all provinces:

• Garnishment of wages: the court orders the debtor's employer to remit a portion of their wages to you directly. Provincial rules cap the amount garnishable (typically 20–50% of net wages).
• Garnishment of bank accounts: you serve the judgment on the debtor's bank, which freezes and transfers the funds up to the judgment amount.
• Writ of seizure and sale: a sheriff can seize and sell the debtor's personal property or real estate (subject to exemptions set by each province).
• Examination of the debtor: you can summon the debtor to court to disclose their assets, income, and employer — valuable for locating seizable property.

Enforcement is handled through the same court that issued the judgment. There are additional fees for each enforcement step. If the debtor has no seizable assets or income, recovery may be practically impossible until their financial situation changes — judgments typically remain enforceable for 10 to 20 years (varies by province) and can often be renewed.