Being owed money is not the same as being able to collect it. The law gives you a path, but you have to walk it deliberately, and it starts long before a courtroom.
Unpaid invoices, a loan to someone who stopped answering, a contractor who took a deposit and vanished. For most individuals and small businesses, the amounts involved fall under $50,000, which puts them squarely in Ontario's Small Claims Court, whose ceiling rose from $35,000 to $50,000 on October 1, 2025. That court was built to be accessible, and understanding how it works, and what to do before you file, is the difference between recovering your money and adding a court file to your losses.
Start With a Real Demand Letter
Before anything is filed, the first step is a proper demand letter. Not an angry email, a clear written demand that sets out what is owed, why, and by when, and states plainly what happens if payment is not made. A well drafted demand from a lawyer does two things. It signals that you are serious and organized, and it creates a record that you gave the other side a chance to pay. A surprising number of debts resolve at this stage, because the debtor realizes the alternative is a court process they will likely lose.
"A good demand letter is the cheapest step in the whole process, and often the most effective. Many debts never make it past it."
The Small Claims Process
If the demand does not produce payment, you file a Plaintiff's Claim. The debtor is served and has a limited time to file a Defence. If they do not, you can move for default judgment. If they do defend, the matter proceeds to a settlement conference, a mandatory step where a judge meets with both sides to explore resolution and narrow the issues. Many cases settle there. Those that do not are set down for trial before a judge or deputy judge.
The whole point of Small Claims Court is proportionality. Filing fees are modest, the procedure is simplified, and you are not buried in the documentary discovery and examinations that a Superior Court action involves. It is designed so that recovering a few thousand dollars does not cost more than the debt.
What You Need to Prove
Small Claims Court is informal, but you still have to prove the debt. The building blocks are straightforward: evidence that the debt exists, and evidence that it was not paid. In practice that means the contract, engagement letter, or purchase order, the invoices themselves, a record of any partial payments, and the messages where the debtor acknowledged the amount or promised to pay. A debtor's own email saying they will pay you next month is often the single most valuable document in the file, because it removes any real argument about whether the money is owed.
Organize all of it chronologically before you file. The deputy judge at your settlement conference will want to see that the paper trail actually supports the number on your claim, and a clean, ordered record does more to move a case toward payment than any argument you can make on the day.
What You Can Recover on Top of the Debt
A judgment is rarely limited to the bare amount owed. If your contract or invoice sets an interest rate, you can generally claim it, subject to one ceiling that changed recently. Section 347 of the Criminal Code makes it an offence to enter into an agreement to receive interest at a criminal rate, and as of January 1, 2025 that rate is 35% APR, lowered from the previous 60% effective annual rate. A contractual rate above that is not merely unenforceable, it is criminal, and the amended provision now also captures offering or advertising such an agreement. Creditors relying on aggressive interest terms drafted before 2025 should have them reviewed, and debtors facing a very high rate should have it checked. If it does not, the Courts of Justice Act provides pre-judgment interest running from the date the money was due, and post-judgment interest until it is paid, so a debtor who drags things out is adding to the total rather than escaping it. On top of that, a successful party can recover disbursements, meaning the filing and service fees, plus a representation allowance that is generally capped at 15 percent of the amount claimed. The cap keeps the process proportionate, but it also means a well-run claim recovers meaningfully more than the principal alone.
The Defences You Should Expect
Most debtors do not deny that money changed hands. They raise one of a handful of defences: that the goods or work were deficient, that the amount claimed is wrong, that some or all of it was already paid, or that the claim is out of time. Anticipating which one is coming shapes how you prepare. A deficiency defence is met with evidence of what was actually delivered. A payment defence is met with a clean ledger. A limitation defence is met by having sued in time, which is why the next point matters so much.
Watch the Limitation Period
One deadline governs almost every debt claim in Ontario. Under the Limitations Act, you generally have two years from the date you knew, or ought to have known, that you had a claim. For an unpaid invoice, that clock usually starts when payment was due and not made. Let two years pass and the debtor can raise the limitation period as a complete defence, and a valid debt becomes uncollectable. This is the most common own goal in debt recovery.
Ask the Collectability Question First
Before you spend anything, ask the question that matters most: can this person or business actually pay? A judgment against someone with no income and no assets is a piece of paper. It is worth thinking, at the outset, about whether the debtor has wages, a bank account, or property that a judgment could eventually reach. That analysis shapes whether pursuing the claim makes sense, and how aggressively. We cover the tools for collecting once you have a judgment in our article on enforcing a judgment in Ontario.
When the Debt Is Larger
If the amount owed is above the $50,000 Small Claims ceiling, the claim belongs in the Superior Court, where the process is more formal but the costs recovery is stronger. That is covered in our article on collecting a debt over $50,000.
If you are owed money and cannot get paid, the path from invoice to recovery is well worn, and it rewards moving early. Our debt collection and civil litigation pages explain how I help individuals and small businesses recover what they are owed, and the first consultation is free.
