The loss of a loved one can bring not only emotional hardship but also financial uncertainty — especially when questions arise about unpaid debts. In Canada, those debts don’t automatically pass on to family members. Instead, they’re paid from the deceased’s estate before any inheritance is distributed.
Financial expert Christopher Liew, CFP®, explains that an executor — named in the will or appointed by the court — is responsible for gathering assets, settling debts in an order set by provincial law, and distributing what remains to beneficiaries. If the estate can’t cover all debts, creditors usually write off the balance.
There are important exceptions. If a loan, credit card, or line of credit was jointly held or co-signed, the surviving borrower becomes fully responsible for repayment. This applies to all types of debt, from mortgages to auto loans.
For example:
- Credit cards — Paid from the estate. If the estate is insufficient, balances are written off unless there’s a joint cardholder, who must then pay.
- Mortgages — Surviving co-signers or spouses are responsible; otherwise, the estate may sell the home to cover the balance.
- Auto loans — Secured lenders can repossess the vehicle if payments stop.
- Student loans — Federal and most provincial loans are forgiven, but private loans may still require repayment.
Liew advises Canadians to prepare by keeping wills current, naming an executor, and considering life insurance to cover liabilities. Clear communication with trusted family members about debts, accounts, and repayment instructions can help survivors avoid confusion and financial strain.
In short: you’re generally not liable for a parent’s credit card debt unless you were a joint account holder — but planning ahead is the best way to ensure that grief isn’t compounded by financial uncertainty.
Ask ChatGPT