My 85-year-old mother has stopped paying her credit card and is already $25K in debt — am I on the hook to repay after she dies?

Imagine Jean, a 51-year-old woman from Alberta, who cares for her elderly mother.

While the two are close, Jean has just discovered her 85-year-old mother, Marie, has stopped paying her credit cards over the past year, following a terminal diagnosis. She has spent much of her life living frugally and has now expressed some regrets about not enjoying life more during her younger years. Marie is now $25,000 in debt and the companies are beginning to call and send letters. Jean wonders if they can put a lien on her mother’s house or other income.

Marie’s financial picture is modest: She receives the maximum Old Age Security (OAS) of $814.10 and an additional $1,600 from her late husband’s pension. She lives in a house worth around $100K, but it’s held in an irrevocable trust under Jean’s name. Her car is owned by Jean’s brother and there are no other retirement accounts or investments.

At this stage in life, the family isn’t so concerned about Marie’s credit score — but they do want to know whether collectors can seize assets or cause trouble later on.

What assets can debt collectors go after?

Creditors don’t automatically get to swoop in and take property when someone stops paying their credit card bills. They must first sue the borrower in court to obtain a judgment. Once they have that judgment, they may be able to pursue some assets, though protections vary depending on provincial or territorial law.

Generally, a judgment allows creditors to pursue things such as:

• Non-exempt valuables: Jewelry, antiques or collectibles above a specific value.
• Vehicles: A second car or a luxury vehicle, if provincial or territorial exemptions don’t cover it.
• Bank accounts: Funds in a chequeing or savings account, unless they’re specifically exempt, such as protected pension payments.
• Real estate: Property owned in the debtor’s name, though a home placed in some types of trusts may be protected.

In Marie’s case, most of her assets are out of reach.

OAS benefits are protected from garnishment by federal law — with the exception of debts owed to the federal government, such as unpaid taxes, Employment Insurance (EI) overpayments or the Canada Emergency Response Benefit (CERB) payments. Her pension may also be protected depending on how it’s structured. Since the house is in an irrevocable trust and the car belongs to her son, those assets aren’t in her name and therefore aren’t eligible for seizure.

That leaves only the small amount of cash in her bank account as a possible target — but even then, as OAS funds are typically protected, Marie’s remaining money will likely be out of reach to collectors.

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Can you inherit debt?

One of Jean’s biggest concerns is what happens when her mother eventually passes away. Will she and her siblings inherit this $25,000 balance owing?

The short answer is no. In Canada, adult children don’t inherit their parents’ debt, except in specific situations — usually this means a cosigned loan or a jointly held account. Credit card companies can only make claims against the estate of the deceased, that is, any assets the parent owned at the time of death, and adult children aren’t responsible for paying it off. If there are few to no assets, the debt simply goes unpaid.

In Jean’s case, because her mother’s home is in an irrevocable trust and her car isn’t in her name, there won’t be much for creditors to go after. The credit card companies may file claims, but there will be little or nothing left in the estate to pay those debts.

For Jean and her siblings, the reality is that their mother’s credit card debt is unsecured and unlikely to impact her final years. OAS and pensions are generally protected and any assets in trusts or those owned by others aren’t at risk.

How to help elderly family members manage their finances

Jean’s story highlights the importance of monitoring an aging parent’s finances before small problems snowball into larger issues. Here are a few ways families can help:

• Open the conversation early: Many seniors hide financial struggles out of pride or fear. Regular check-ins can help you manage challenges early.
• Review accounts together: Ask to go over monthly bills, account balances and credit reports. Spotting late payments early can prevent collection actions.
• Set up autopay for essentials: Ensure utilities, mortgage and insurance premiums are automatically paid to reduce the risk of lapses.
• Consider power of attorney: If a parent can’t reliably manage money, giving a trusted relative legal authority to handle finances can help protect them.
• Explore credit counselling: Nonprofit credit counselling agencies can sometimes negotiate lower payments or help set up debt management plans.

Families should be prepared for collection calls both now and after a loved one passes. Remember: You aren’t legally responsible for a parent’s credit card debt in most situations.

To help family members track their spending and create a budget, consider a money management app, such as Monarch Money. Link bank accounts and investment portfolios to see all transactions in one place, which helps your family stay on top of spending. You can also create custom goals for retirement spending, personalized categories, and track your progress at all times on the all-in-one money management platform. Monarch also offers a seven-day free trial to see if it’s right for you. If you like the platform, you can then get 50% off for your first year with the code WISE50.

If collectors reach out after death, inform them that the account holder has passed and direct them to the estate executor. Don’t make any payments yourself — doing so could make you appear liable for a debt that was never yours.

Your elderly parent’s unpaid credit card bills shouldn’t weigh on your peace of mind. Rather, focus on ensuring your loved ones are comfortable and cared for in their final years.