Debt and Death – Some Things to Note: Words by a Toronto Bankruptcy Trustee
Seniors filing for bankruptcy is a growing trend in Ontario. Approximately 30% of the insolvencies in the last year were filed by senior citizens. With this growing trend, it is important to know about debt and death, as morbid as that might sound. We will discuss three topics regarding debt and death in this blog.
Debt & Death in General
Firstly, debts cannot be inherited. Creditors are not legally able to go after the family members of a deceased person; although, they often will because they still want their payment. Creditors should be going after the estate of the deceased person, if there are any assets, and then it is the responsibility of the executor to pay all debts and bills first. A will does not normally pass debts on to anyone else but debts have to be paid before the assets can be distributed to family. If there are insufficient funds then the debts should be written off.
If a Bankrupt Dies
If someone passes away during the administration of their bankruptcy it is the responsibility of the executor of the estate to get the trustee a copy of their death certificate. The trustee and the executor of the estate must then work together to ensure assets are distributed properly. If there is a life insurance policy and the beneficiary was the estate then the payment will come to the trustee for the benefits of the creditors. It is also important to note that in the case of a deceased bankrupt, according to the Bankrupt and Insolvency Act Section 136(1)(a), there is a provision for, if funds are available, reasonable funeral and testamentary expenses incurred by the legal representative.
Bankruptcy of a Deceased Person
It is possible for the executor of an estate to file a bankruptcy for a deceased person. Usually so that a proposal can be filed and come to a deal with creditors regarding assets.
Remember, we are a trustee firm that is ready to help you deal with your debt, sooner than later, so if you have any questions, do not hesitate to call or request an appointment.
Howard Landau is a licensed trustee in Toronto specializing in bankruptcy, consumer proposals, personal income tax debt and other CRA debt that individuals are faced with.