My mom owes $25,000 in credit card debt and she's dying — here's what I learned about whether I'll owe it too

For instance, what if Jean were to learn that her 85-year-old mother, Marie, recently stopped paying her credit cards. While her mother has always been frugal and fiscally disciplined, this behaviour appears to have changed dramatically about a year ago, following a terminal diagnosis.

Perhaps Marie started to question a lifetime of frugality. Either way, Marie’s actions have created a problem for her daughter: A $25,000 credit card debt.

Jean only found out when creditors started calling the house and payment notices started showing up in the mailbox. Jean isn’t concerned about her mother’s credit score — which definitely took a hit; Jean’s biggest concern is whether her mother’s debts transfer to her when Marie is gone.

Debt is on rise among all age cohorts

According to debt data from TransUnion (1), total household credit debt peaked at $2.5 trillion in 2024. And the data shows that financial stress isn't limited to younger generations.

For middle-age Canadians — those responsible for building their own retirement plans while taking care of aging parents — understanding what happens to debt accumulated by their parents is a particular source of stress.

To illustrate, let’s assume Jean’s mother, Marie, receives the maximum Old Age Security (OAS) payment of $816.54 per month for seniors aged 75 and over (2), plus an additional $1,600 from her late husband's pension. Let’s also assume Marie lives in her home, debt-free, worth about $100K, which is held in an irrevocable trust in Jean's name. While Marie continues to drive, her car is owned by Jean's brother, and there are no other retirement accounts or investments.

What Jean and her siblings need to know is whether creditors can seize assets now, while Marie is alive, or create problems for the estate down the road.

What creditors can actually go after

Creditors don't automatically get to swoop in and take property when someone stops paying their credit card bills. Creditors must first sue the borrower in court and obtain a judgment. Once there is judgment, creditors can start going after certain assets — though protections vary significantly depending on provincial or territorial law.

In general, though, a judgment will allow creditors to pursue:

• Non-exempt valuables: This includes jewellry, antiques or collectibles above a specific threshold value
• Vehicles: A second car or a luxury vehicle, where provincial or territorial exemptions don't apply
• Bank accounts: Funds in a chequing or savings account, unless specifically exempt — such as protected pension payments
• Real estate: Property owned in the debtor's name, though homes held in certain types of trusts may be shielded

What does that mean for Marie?

Using Marie’s situation as an example: Most of her assets are well out of reach.

OAS benefits are protected from garnishment under federal law (3) with one key exception: Debts owed directly to the federal government, such as unpaid taxes, Employment Insurance (EI) overpayments or Canada Emergency Response Benefit (CERB) repayments. Her pension income may also be protected, depending on how the plan is structured. Because the house is held in an irrevocable trust and the car is registered in her son's name, creditors cannot go after these assets.

That leaves the only asset creditors can go after, the cash sitting in her bank account — and even that is likely protected, given that her deposits are primarily funded by OAS payments.

Can children inherit a parent's debt in Canada?

Assuming that a family structures an aging parent’s assets so that they are protected from creditors, the next question is whether or not a deceased person’s family will inherit the debt?

For Jean and her siblings, the question is whether or not they’ll be on the hook for the $25,000 owed to the credit card issuer?

The short answer is no.

In Canada, adult children do not inherit their parents' unsecured debt (4). But that doesn’t mean creditors won’t get paid. Credit card companies (and other creditors) can make a claim against the estate of the deceased — meaning assets the parent owned outright at the time of death. However, if there are insufficient assets in the estate to cover those claims, the remaining debt is simply written off. Adult children are not personally liable.

Two exceptions when family ends up responsible for unpaid debt

There are two important exceptions to be aware of: a cosigned loan, or a jointly held credit account.

If Jean or a sibling had co-signed one of Marie's credit cards or was listed as a joint account holder, they could be held responsible for that specific debt.

As long as adult children do not co-signed or hold joint accounts with the debtor, the creditor cannot hold the adult children responsible for unpaid debt.

In Marie's case, because the house is in a trust and the car isn't in her name, there will be little for creditors to go after. Creditors may file claims against the estate, but with limited assets, those claims are unlikely to go anywhere.

How to handle collection calls — now and after death

Families in these situations often find the are on the receiving end of collection calls — sometimes before a parent passes, and sometimes after. Knowing how to respond makes a real difference.

While Marie is alive, Jean is under no obligation to speak with her mother's creditors or make payments on her behalf. Doing so could actually be interpreted as an acknowledgment of liability. Jean can simply confirm that the account belongs to her mother and is being handled — and leave it at that.

After Marie passes, the rules shift slightly. Once a creditor calls, Jean should inform them that the account holder has passed away and direct them to the estate executor. That person — whether it's Jean, a sibling or a lawyer — is responsible for communicating with creditors and settling any legitimate claims from the estate.