What Happens If I Die During Bankruptcy?

We live in an unpredictable world, and the question, “What happens if I die during bankruptcy?” is a valid concern that often plagues the minds of those navigating through the financial labyrinth of bankruptcy. This article aims to shed light on this complex issue and provide clarity.

Understanding Bankruptcy

Before diving into nuances of the topic, it’s important to grasp the concept of bankruptcy. Bankruptcy is a legal proceeding undertaken by individuals or businesses unable to pay their debts. It provides a fresh start, but at the cost of some personal assets.

Death During Bankruptcy: The Overview

The crux of the matter is simple – if a person passes away during bankruptcy, it doesn’t directly affect them. However, the implications for their spouse or next of kin can be significant, especially if they’ve filed a Consumer Proposal to manage the debt.

Death and Consumer Proposal

A Consumer Proposal is a legal agreement formulated under the Bankruptcy and Insolvency Act. It allows debtors to pay back a portion of the debt owed over a specific time period. But what happens if the person dies before completing all payments?

The Implications for the Surviving Spouse

The surviving spouse is under no obligation to continue making payments on the Consumer Proposal. They can choose to continue the payments if they wish, but more often, they allow the proposal to default, which happens when three consecutive payments are missed.

Joint Debts: The Exception

An important exception to note here is joint debts. If the deceased and the surviving spouse had joint debts, the surviving spouse is still liable for them. This should be thoroughly discussed with the trustee at the onset of the Consumer Proposal.

Communicating with the Trustee

Upon the death of the spouse, it’s vital to inform the trustee and provide them with a copy of the death certificate obtained from the funeral home. The trustee, acting as the Administrator of the Proposal, needs this information to manage the proceedings.

Contact Bankruptcy Canada for more detailed information on bankruptcy and debt solutions. You can also fill out their free bankruptcy evaluation form. For visual learners, explore their YouTube Channel. Bankruptcy Canada has been assisting individuals and families navigate through debt for over a quarter-century.


The realm of bankruptcy and its implications can be daunting, especially when dealing with scenarios like death during the process. However, armed with the right information and guidance, you can make informed decisions and navigate these challenges with confidence.

While this article provides a comprehensive guide on what happens if one dies during bankruptcy, each situation is unique, and it’s important to consult with a professional for personalized advice.

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