When the deceased’s debts exceed their assets, the personal representative may either:
- administer the estate, or
- turn the assets over to a trustee in bankruptcy.
If the personal representative elects to administer the estate, they should advertise for creditors (see Ten Steps to Settling an Estate, in step 6, for how to do this). If the personal representative does advertise for creditors, they must wait 30 days to see if any creditors come forward with a claim against the estate. If no creditors make a claim, the personal representative can carry on with the administration of the estate. If the personal representative simply writes to the creditors directly, the estate is potentially liable for the debt until the creditor responds, which can be an indeterminate amount of time.
The personal representative should also consider an application under s. 39 of the Trustee Act for an order for distribution of the estate under the direction of the court.