Can I Inherit Debt After Someone’s Death?
Many questions arise when a loved one passes away, you may be concerned that the debts of your loved one will be passed along to you. So, it’s important to know that debts cannot be inherited. You cannot leave your debt to someone. In this article, we will discuss what happens to debt after death in Canada.
You cannot be liable for someone’s debt due to death, unless you are a joint debtor, or you are a guarantor.Let’s Talk
What happens to your mortgage after death in Canada?
With a Mortgage, typically in a marriage, the married couple are both usually on the mortgage agreement, so in this case when one of the spouses dies, then the other spouse will be legally responsible for the remainder of the mortgage. Hopefully, there will be a proper insurance plan to help protect the other spouse in these situations.
What happens to your credit card debt after death in Canada?
For the debt of the individual that died, the proper procedure is for the lender to go through the estate to gain payment for the outstanding loans. If there are assets upon death, then the trustee/executor of the estate will be responsible for making sure that any loans/bills are paid via the proceeds of the deceased estate.
Typically, all creditors will need to be informed upon the death of the individual, and a copy of the death certificate may be necessary. You will need to make sure that all accounts are then closed.
Before any assets can be distributed, the debts of the deceased will need to be dealt with first. Once that is done, then the assets can be passed on to the heirs.
What if there is no money to pay the debt after death?
If there are inadequate funds to pay off the deceased debts, the remaining debts will not be able to be collected, unless any of the debt has been guaranteed or any of the debts are joint. It is also possible for a deceased person’s estate to apply for insolvency proceedings. But first, the executor will have to obtain a court order allowing the estate of the deceased person to file an assignment in bankruptcy or file a proposal. However, the creditors will still be able to pursue the guarantors and joint debtors, if any.
It is important to remember that with debt, you are only responsible for the debt that you have signed for, co-signed, have a joint loan or agreed to pay. It is very important to know exactly what debt you are responsible for paying.
If a loved one has recently passed away with debt and you are not sure what to do, get in touch with the Licensed Trustees at David Sklar & Associates. Our trustees will help you weigh all of your options, and explain your rights.
Book your free confidential consultation with David Sklar & Associates today and make a decision your future self will thank you for.Let’s Talk