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It’s common to have concerns about the state of a family member’s finances, particularly their personal loan and credit card debt. More specifically, you may wonder if you’d be on the hook for your family member’s debt, including credit card debt, when they pass away. 

Read on to find out more about what happens to credit card debt when someone passes away in Canada.


Key Points

  • Credit card debt doesn’t necessarily go away automatically after the primary cardholder passes away.
  • If anyone else is named on the credit card account as a joint borrower, that person would be liable for the remaining debt.
  • If the person who passed away was a sole cardholder, the person’s estate would cover the debt.
  • If the estate does not have the funds to cover the debt, the creditor would write off the debt and be unable to recover it.

What Happens To Credit Card Debt When You Die In Canada?

If you’re not a co-borrower on the credit card and the primary cardholder dies, what happens to the outstanding credit card debt? Does it just disappear?

No, the debt will be covered by the cardholder’s estate. That is, if the estate is adequate enough to deal with the entire credit card debt. 

When a credit cardholder dies, all the assets in their name become part of their estate, which includes their entire net worth. Any debts still outstanding – including credit card debt – will be repaid using the assets from the estate.

A credit card that is held exclusively in one person’s name is the sole responsibility of that individual. As such, only they are liable to repay the debt. In the event of their death, their estate will be accessed to cover the debt. 


What Happens To Credit Card Debt When You Die With No Estate?

A debt is considered uncollectible in the instance when there isn’t enough money in the estate to pay off the debt and the debt was solely in the name of the deceased person. In this case, the debt is essentially written off by creditors.

Learn more: What Happens To Your Debt When You Die?


Are You Responsible For Joint Credit Card Debt After Death In Canada?

If you signed your name on the credit card contract as a co-signer or co-borrower along with the deceased, then you are legally responsible for paying the credit card debt left behind if the other cardholder dies.

The joint credit card is the responsibility of both named individuals on the contract. If one of the co-borrowers passes away, the other person left behind will be liable for continuing to make debt payments. 

What If You Can’t Pay Off A Joint Credit Card Debt?

If your co-borrower has suddenly passed and you’re struggling to pay off your joint credit card debts, you could face any of the following repercussions:

  • Your Credit Score May Be Affected. If you don’t have enough money to make regular credit card payments, your credit score could be negatively affected. Payment history plays a key role in your credit score, so failure to make these payments can drag your score down.
  • A Collection Agency May Be Involved. If you stop making credit card payments, the creditor may sell the debt to a collection agency. This will be noted on your credit report and have a negative impact on your credit score. Plus, you’ll be subject to ongoing calls from the collection agency until you repay what you owe.
  • The Creditor May Sue You. Creditors may take legal action to collect unpaid credit card debt.

Possible Solutions To Unpaid Credit Card Debt

If you’re unable to repay the credit card debt, there are options available to help:

  • Take Out A Debt Consolidation Loan. A debt consolidation loan combines multiple debts into one loan with one monthly payment, often at a lower interest rate. This helps lower overall costs and simplifies debt repayment. Be sure to check your credit score to ensure you qualify for the best rates.
  • Speak To A Credit Counsellor. You can also speak to a credit counsellor who can help you evaluate your financial situation and provide you with a debt relief solution. This may include a simple solution like a budget to a more extreme option like consumer proposal or bankruptcy.

Are You Responsible For Credit Card Debt After Death In Canada If You’re An Authorized User?

An authorized user is much different than a co-borrower, especially when it comes to liability for repaying the debt. Most shared credit cards in Canada involve a primary cardholder and authorized users, rather than joint cards with two co-borrowers. 

As an authorized user, you have the privilege of using the credit card without having the responsibility of repaying the debt owed if the cardholder passes away. Authorized users are only given permission by the primary account holder to use the card. 

In this case, only primary cardholders are responsible for paying off the outstanding balance, not authorized users.


How Does Balance Protection Insurance Affect Credit Card Debt After Death In Canada?

If a person dies and has balance protection insurance on their credit card, this policy will cover the remaining debt. It’s an optional type of insurance meant to help cardholders cover their credit card payments in case they’re unable to keep up due to things like job loss, disability, and even death. 

Should You Get Balance Protection Insurance Or Life Insurance?

  • Balance Protection Insurance. This may be more worthwhile if there is a co-borrower tied to the contract. That way, the co-borrower will not have to carry the financial burden of repaying the outstanding debt in the event that the other co-borrower passes away.
  • A Life Insurance Policy. This type of coverage can be a better option because the benefit paid out can be used to pay off all sorts of debt, including credit card debt. Plus, life insurance can be cheaper than a credit card’s balance protection insurance.

Does A Will Protect My Hiers From My Debts?

A will dictates the financial outcomes of the deceased individual. However, it’s important to note that a will distributes assets and not debts. Nevertheless, these assets can only be distributed once the proven debts have been paid. 

Ideally, there are enough cash assets to pay off the debts. But if this is not the case, other assets may be sold to pay off the debt. Once this has been done, the remaining assets are distributed among the heirs

Caution: Be very cautious if you are contacted by a creditor to pay a debt. If you do not believe you are responsible for this debt, make sure to ask for a copy of your signature on the contract from the creditor. Making a payment on a debt could be interpreted as you giving consent and that you are accepting responsibility for the debt. This is why it is best to always speak to a professional before taking such actions.

Learn more: 5 Important Reasons You Need A Will In Canada


What Happens To Credit Card Rewards When A Cardholder Passes Away?

What happens to credit card rewards after the death of a cardholder depends on the specific points program. Here are a few popular credit card rewards programs and how their points are handled when a cardholder dies:

PC OptimumAfter the cardholder’s death, the PC Optimum account is closed and all points will be lost.
Air MilesAir Miles accounts can be merged with a family member’s account after your passing.
AeroplanAeroplan points can be transferred to your spouse or other immediate family member after your passing, though they charge a transfer fee.
RBC RewardsIf your RBC Rewards credit card is jointly held with someone else, the surviving cardholder will take over any remaining points. If you’re solely named on the card, your estate can redeem points for up to 90 days after your death.
Scotia RewardsScotia Rewards points may be transferred to someone else after your death, but the person only has 60 days to request the points to be transferred into a new account.
TD RewardsTD points can be transferred to an authorized user who applies for a new TD card as a primary cardholder.

What To Do After A Credit Card Holder Passes Away

After a family member passes away, here are some steps to take:

Notify The Creditor. Reach out to the credit card issuer to let them know about the death of the primary cardholder. This will also prevent unauthorized transactions.

Continue Making Payments If You’re A Joint Cardholder: If the credit card was jointly held, the surviving account holder will be responsible to continue making payments.

Review The Estate’s Funds. Find out if the deceased’s estate has enough funds to cover the remaining credit card debt.


How Will Creditors Know If A Cardholder Dies?

Typically, an executor will issue a notice of a person’s passing. If credit card payments stop, creditors will notice right away and may investigate eventually discovering the news that the cardholder passed away. If there is outstanding debt, the creditors have a certain amount of time to claim what they’re owed from the estate. 


Bottom Line On What Happens To Credit Card Debt When You Die In Canada

Credit card debt doesn’t just disappear after death — instead, it’s settled through the estate. If there’s a lack of funds in the estate, creditors may write off the debt. However, if there are co-signers on the account or the account is jointly held with another person, that surviving account holder remains responsible for the debt. 

Credit Card Debt After Death In Canada FAQs

Will my beneficiaries inherit my debt?

No, your loved ones won’t inherit your debt when you die. Any debts remaining after your death are paid out from the assets in your estate.

Will credit card providers come after my children to pay for my debt?

Some credit card companies may try to get your children to pay for your credit card debt. However, they are not obligated to pay your debts, unless it was a joint debt. Your children should speak with a lawyer when you die so they understand their rights and potential obligations. However, if you had credit card balance protector insurance, your policy may cover the outstanding debt when you die. 

Can creditors use my life insurance policy to cover my debts when I die?

Creditors do not have a claim to your life insurance policy payout with named beneficiaries. If you have a life insurance policy, the payout will go directly to the named beneficiary.

Are debts forgiven after death?

Debts in your own name are your responsibility, no one else’s. This includes credit card debt, mortgages, personal loans, student loans, and lines of credit. Unless someone else co-signed on the credit card or loan, there is no one else liable for these debts. If your estate is valuable enough to cover your debts when you die, then your debt will be settled. But if your estate does not have enough assets to pay off your debts when you die, your debts will be forgiven. 

What happens to your bank account when you die?

If you’re the sole owner of the bank account, the funds in your account will be passed down to your beneficiaries or used to settle any debts you may have. If the account is a joint account, the surviving holder will immediately claim any money. Otherwise, if no survivorship agreement was put in place, the funds in the joint bank account will typically be absorbed by your estate and be disbursed accordingly.

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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