Death and taxes are, some pundits have been known to say, the two certainties in life. And the death of a loved one is especially traumatic. The loss of a family member is hard enough but when that person passes away with sizable debt the trauma can become exceedingly difficult to deal with.
Luckily, the BIA (the Bankruptcy and Insolvency Act) has taken this difficult scenario into account and there are procedures in place to help grieving relatives when a debtor passes on. I remember a recent situation where a family called us looking for help and assistance after a parent had passed away. They did not know what to do. Many creditors (the companies the deceased owed money to) were trying to collect the money that was owed to them from the estate, which did not have enough assets to pay the debts in full. The creditors were making demands and putting pressure on the executor (the person entrusted by the deceased to oversee the paperwork surrounding that person’s property) of the estate.
We explained to the executor that he must first go to the bankruptcy court to get an order for the estate to be assigned into bankruptcy. This procedure is like when a living person files for bankruptcy protection. Once the bankruptcy petition was accepted by the court, we would be able to help guide them through this process.
The executor of the estate realized that there were not enough assets in the deceased’s estate to pay each creditor fairly, and that the best option would be to assign the estate into bankruptcy so the creditors would each get their fair share of the assets. Any leftover assets (such as money in a bank account) owing to the creditors would be taken care of in the bankruptcy.
This solution gave the children of the deceased peace of mind and allowed them to grieve properly without having to worry about collection agencies or creditors harassing them or the executor of the estate.
If you have found yourself in a similar situation and need help, please do not hesitate to reach out to our Licensed Insolvency Trustees. We will review the situation and give you advice on how you might want to proceed. If you’d like to meet with one of our professionals, just click the FREE CONSULTATION button, below, or give us a call today. We are here to help you!