Ask the Expert: Can Debt Be Inherited?

Dear Jeff:

My father recently passed away and we have discovered that he had a lot of credit card debt outstanding. My mother is also deceased, so my sister and I are the beneficiaries on his estate. There isn’t much in the estate, but I’m worried that my sister and I will be inheriting my dad’s outstanding credit card debt too, which could put a real strain on our finances. Can debt be inherited when you die in Canada? Are we on the hook?


Paul A,

Calgary, AB

Dear Paul:

Firstly, my sincere condolences on the loss of your father. Losing a loved one is hard enough, but when you add in financial stress when you are dealing with the estate afterward, it’s even more challenging.

The short answer to your question is no, debts are not inherited. Even if you are the beneficiary of the estate, no one can bequeath their debts to another person. The only exception to this is if you are a joint holder or a co-signer on the debt in question. When debt is taken out jointly or with a co-signer, both parties on the account are equally responsible for the debt. So, if one person dies, the other person is responsible to pay the debt.

It is possible that creditors will go after your father’s estate to try to collect the money that they are owed. Depending on a number of circumstances, any assets that he left behind may have to be liquidated and sold to pay the debt off, which could reduce (or even eliminate) any inheritance that you might have otherwise received.

My advice is to check and see if your father’s credit cards had any life insurance on them. Many cardholders take out life insurance on their credit cards specifically, meaning that with some conditions, the entire balance owing would be paid out in the event of their death.

It isn’t uncommon for creditors to try to contact beneficiaries or family members of a deceased person, but technically they are not able to collect the debt from you. If a creditor isn’t able to collect from the estate, they will have to classify this debt as uncollectible.

It is a good idea to know what your rights are.

If a creditor is contacting you and insisting that this debt is your responsibility, have them provide written confirmation that you jointly own the debt (i.e. a contract with your signature on it). If the estate funds have already been depleted paying out debts (or if there isn’t any money in the estate to begin with) be prepared to show creditors written proof that there aren’t sufficient funds to pay the debt.

This is also a reminder to always read the fine print on your credit cards and to understand what your responsibilities are when you take debt out. It can save you a lot of headaches down the road.

Hope this helps and best of luck sorting this out.

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