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How to stop debt or pension payments after someone has died

May 10, 2021 Jason Heath
How to stop debt or pension payments after someone has died

A. I am so sorry for your loss, Jarnail. The difficult reality of losing a loved one is that while you are mourning, there are also financial, legal, and other administrative obligations to manage. 

Depending upon the source of the student loan, there may be no repayment requirement, and payments made after your son’s death may be owed back to his estate. 

If your son’s loan was a federal student loan, the Canada Student Financial Assistance Act states that “all obligations of a borrower in respect of a loan…terminate if the borrower dies.” The National Student Loans Service Centre (NSLSC) can be contacted in a number of ways

If the loan was a provincial or territorial student loan, you can contact the applicable student aid office. The Master Student Financial Assistance Agreement for the province of Ontario, for example, states: “obligations…in respect of your outstanding loan balance will terminate upon your death.”

If the loan was from a bank, Jarnail, other debts of the deceased must generally be paid out of the assets remaining in their estate. Those assets could include cash, investments, real estate, personal effects or insurance. Keep in mind that not all assets become part of an estate. Assets that are held jointly or that have named beneficiaries may not form part of a person’s estate. 

It is possible for an estate to be insolvent (bankrupt) and have more debts than assets. In this case, there may be provincial legislation to decide the order of repayment for the debts. Debts of the deceased would generally not become the responsibility of their family unless it was a joint debt or there was a co-signor. 

Some debts may have life insurance associated with them that pay off the debt upon death. 

There may be other parties to contact upon someone’s death, and even payments that an estate or beneficiary is entitled to receive.

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