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Debts of Deceased

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Financial Planning -> Wills and Estates -> What happens to the debts of a deceased person?

What happens to debts of the deceased?

Debts are normally paid out of the assets of the estate of the deceased, before distributions are made to heirs.  If the estate is insolvent (the assets of the estate are not sufficient to pay the debts), then the order of payment is prescribed by provincial legislation.

If any unpaid loans to the deceased were cosigned by another person, that person will likely be liable for any balance unpaid after repayments are made from the estate.

Some debts may be extinguished upon the death of the debtor - for instance, in the case of insured loans or mortgages.

The Canada Student Financial Assistance Act provides for some student loans to be repaid by the federal government in the event of the student's death or permanent disability.

For information regarding what happens in each province, see What to do when someone dies, which has links to wills and estate information on provincial/territorial websites.

 

Revised: December 18, 2012

 

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