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CIVIL DISPUTES GUIDE
Debt, Loan, & Payment Disputes in Ontario
A practical guide to unpaid invoices, business and personal loans, promissory notes, guarantees, interest, demand letters, payment plans, court claims and enforcement.
Debt and payment disputes often look simple at first: someone says money is owed, and someone else says it is not. The harder questions are what proof exists, whether interest or fees are recoverable, whether the debtor can pay and what process makes financial sense.
Prepared by Tatyana Trusz, Trusz Law • Updated July 2026 • 15 min read
QUICK ANSWER
How should a debt dispute be assessed?
A debt dispute should be assessed by proof of the obligation, the amount owing, interest and fees, limitation periods, defences, collectability and the cost of recovery.
Winning a judgment is not always the same as getting paid. The strategy should consider whether a demand letter, payment plan, settlement, Small Claims Court, Superior Court or enforcement step is most likely to produce a practical result.
IN THIS GUIDE
RELATED CIVIL DISPUTES
MONEY OWED?
A strong debt claim still needs proof, timing and a recovery plan.
Judgment is only one step. Collectability and enforcement matter.
THE SHORT ANSWER
A debt claim should prove both the obligation and the recoverable amount
Debt, loan and payment disputes commonly require proof of:
- who owes the money;
- who is entitled to collect;
- what agreement or invoice created the obligation;
- what amount is outstanding;
- when payment became due;
- whether interest, fees or costs are recoverable;
- whether there is a guarantee or security;
- whether the claim is within the limitation period; and
- whether the debtor has assets or income available for recovery.
The legal claim and collection strategy should be developed together.
KEY TAKEAWAYS
At a glance
- Debt claims may arise from unpaid invoices, loans, promissory notes, guarantees, services, goods or settlement agreements.
- The claimant must prove the amount owing and the legal basis for payment.
- Interest and fees usually depend on the contract, invoice terms, statute or court order.
- Defences may include payment, set-off, defective performance, limitation periods, mistake, fraud, no agreement or wrong debtor.
- A payment plan should be documented clearly and include default consequences.
- Ontario Small Claims Court currently handles claims up to $50,000, not including interest and costs.
- Ontario’s basic limitation period is generally two years from discovery of the claim.
COMMON DISPUTES
What kinds of debt and payment disputes arise?
| Dispute type | Common issue |
|---|---|
| Unpaid invoices | Goods or services provided but not paid. |
| Business loans | Repayment dates, interest, default, security and guarantees. |
| Personal loans | Whether money was a loan, gift, investment or shared expense. |
| Promissory notes | Written repayment promise, maturity date, default and enforcement. |
| Guarantees | Whether a person or company guaranteed another party’s debt. |
| Payment-plan defaults | Missed instalments, acceleration clauses and settlement defaults. |
| Set-off disputes | Debtor claims the amount should be reduced because of a counterclaim or defective work. |
PROOF OF DEBT
What evidence helps prove money is owed?
Useful evidence may include:
- loan agreements or promissory notes;
- invoices and statements of account;
- purchase orders and delivery records;
- contracts, quotes and change orders;
- emails and text messages confirming the debt;
- bank transfers, cancelled cheques and payment receipts;
- ledger entries and account history;
- guarantees and security agreements;
- demands and responses;
- partial-payment history;
- records of interest calculations; and
- documents showing attempts to resolve or collect.
Partial payments, acknowledgements and written promises to pay may be important, but their limitation-period effect should be assessed carefully.
INTEREST, COSTS & FEES
Can interest, fees and collection costs be claimed?
Interest and fees usually depend on the contract, invoice terms, statute or court order.
Review:
- whether the loan agreement or invoice sets an interest rate;
- whether the interest rate is clearly disclosed;
- whether interest is simple or compounded;
- whether late fees, NSF fees or administrative fees are enforceable;
- whether collection costs are recoverable;
- whether the contract has a legal costs clause;
- whether pre-judgment or post-judgment interest applies; and
- whether the claimed rate is commercially and legally supportable.
Ontario publishes pre-judgment and post-judgment interest rates under the Courts of Justice Act where another source does not determine the rate. The contract may change the analysis.
“A debt dispute is not only about whether money is owed. It is about proving the amount, preserving the deadline and choosing a recovery path that can actually produce payment.”
— Trusz Law
DEFENCES & DISPUTED AMOUNTS
Why might a debtor dispute payment?
Common responses include:
- the debt was already paid;
- the amount is miscalculated;
- the money was a gift, not a loan;
- the wrong party is being sued;
- there was no agreement;
- the work was defective or incomplete;
- the debtor has a set-off or counterclaim;
- conditions for payment were not met;
- the limitation period expired;
- the interest or fees are not recoverable;
- the guarantee is invalid or no longer applies; or
- the claim was settled or released.
A strong demand should anticipate likely defences rather than simply state that payment is overdue.
DEMAND LETTERS & PAYMENT PLANS
Should you send a demand letter or negotiate a payment plan?
A demand letter can help clarify the claim and create a record before litigation.
A strong demand should include:
- the basis for the debt;
- the amount claimed;
- interest and fee calculations;
- supporting documents;
- a deadline for payment;
- acceptable payment methods;
- next steps if payment is not made; and
- an invitation to resolve, where appropriate.
A payment plan should be written clearly. Consider including instalment dates, default consequences, interest, security, guarantee confirmation, acceleration, releases, confidentiality and whether court proceedings will be paused or discontinued.
COURT OPTIONS
Small Claims Court, Superior Court or settlement?
The right forum depends on the amount, complexity and remedy needed.
Small Claims Court
Ontario Small Claims Court currently handles claims for money or return of personal property up to $50,000, not including interest and costs. This can be useful for unpaid invoices, smaller loans and straightforward payment disputes.
Superior Court of Justice
Superior Court may be needed for larger debts, secured claims, complex guarantees, urgent relief, mortgage or property-related remedies and claims above the Small Claims Court limit. Ontario’s simplified procedure applies to certain Superior Court claims up to $200,000.
Limitation periods
Ontario’s basic limitation period is generally two years from discovery of the claim. Delay can eliminate the right to sue.
Settlement
Settlement may be more practical than litigation where the debtor has limited cash but can pay over time.
ENFORCEMENT
What happens after judgment?
A judgment confirms the legal obligation, but collection may require further enforcement steps.
Possible enforcement tools can include:
- examination in aid of execution;
- garnishment of bank accounts or wages;
- writs of seizure and sale;
- filing writs against land;
- seizure or sale of personal property;
- enforcing against guarantors;
- settlement after judgment; and
- renewed payment arrangements backed by judgment rights.
Before suing, it is worth asking whether the debtor has assets, income, receivables, real property, ongoing business activity or a guarantor. Collectability matters.
COMMON MISTAKES
Problems that make debt claims harder to collect
No written loan terms.
Disputes arise over whether money was a loan, gift or investment.
Not documenting payment deadlines.
Unclear due dates complicate default and limitation analysis.
Assuming interest is automatic.
Interest should be tied to contract terms, statute or court order.
Waiting too long.
Limitation periods can bar the claim.
Ignoring collectability.
A judgment is less useful where the debtor has no reachable assets.
Accepting vague payment promises.
Payment plans should be documented with default consequences.
Suing the wrong party.
The debtor may be an individual, corporation, partnership or guarantor.
Failing to preserve records.
Bank records, invoices and messages are often central.
Escalating costs beyond the value of the debt.
The process should make economic sense.
HOW TRUSZ LAW CAN HELP
Assess the debt, the proof and the recovery path before costs outrun the claim.
Trusz Law assists with Ontario debt, loan and payment disputes, including unpaid invoices, personal and business loans, promissory notes, guarantees, payment-plan defaults, demand letters, settlement negotiations and civil litigation.
Depending on the matter, that may include reviewing the agreement, invoice history, interest, limitation periods, defences, collectability, Small Claims Court, Superior Court and enforcement options.
The goal is practical: determine whether the claim should be demanded, settled, sued, defended or structured into a payment arrangement that can actually be performed.
FREQUENTLY ASKED QUESTIONS
Debt and payment-dispute questions people often ask
Can I sue someone for not paying a loan?
Yes, if you can prove the loan, the borrower, the amount owing and that payment is due, subject to limitation periods and available defences.
Can I sue for unpaid invoices?
Yes. Unpaid invoices may support a debt or contract claim if the work, goods, amount and non-payment can be proven.
What evidence proves a debt?
Loan agreements, invoices, bank transfers, payment records, emails, text messages, promissory notes, guarantees and account ledgers can all help prove a debt.
What if the debtor says the money was a gift?
The evidence will matter. Messages, payment history, repayment terms and surrounding circumstances may help show whether the money was a loan or gift.
Can I claim interest?
Interest depends on the agreement, invoice terms, statute or court order. Ontario also publishes pre-judgment and post-judgment interest rates under the Courts of Justice Act.
What is a promissory note?
A promissory note is a written promise to pay money, often setting out the amount, repayment date, interest and default terms.
Can I sue a guarantor?
Potentially, if the guarantee is valid and applies to the debt. Guarantees should be reviewed carefully before suing.
What is the limitation period for a debt claim in Ontario?
Ontario’s basic limitation period is generally two years from discovery of the claim, subject to the facts and statutory rules.
Can a debt claim go to Small Claims Court?
Yes. Ontario Small Claims Court currently handles claims up to $50,000, not including interest and costs.
What if the debt is more than $50,000?
The claim may need to proceed in Superior Court, or the claimant may choose to abandon the amount above the Small Claims Court limit to stay in Small Claims Court.
What happens after I get judgment?
Further enforcement may be needed, such as garnishment, writs, examinations or negotiated payment arrangements.
Should I accept a payment plan?
It depends on proof, collectability, urgency and risk. A payment plan should be documented with clear dates, default consequences and release terms.
OFFICIAL RESOURCES
Further reading
ABOUT THIS RESOURCE
Prepared by Tatyana Trusz, Trusz Law. This resource is for general information only and is not legal advice. Debt and payment disputes depend on the agreement, proof, amount, interest, defences, limitation periods, collectability and enforcement options. Last reviewed July 2026.
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