Short answer. Yes. Being owed money by the testator does not disqualify a person from witnessing his will. A mere charge on the estate for the payment of debts due at the testator's death does not prevent his creditors from being competent witnesses. The debt is not a stake in the will's dispositions.
What the law says
A mere charge on the estate of the testator for the payment of debts due at the time of the testator's death does not prevent his creditors from being competent witnesses to his will.
Civil Code, Article 824 — Creditors as Witnesses. Read the full provision →
A creditor is a competent witness
Article 824 settles the point directly: a mere charge on the estate of the testator for the payment of debts due at the time of the testator's death does not prevent his creditors from being competent witnesses to his will. A person the testator owed money to is not, by that fact, disqualified from attesting the will. He may watch the signing and sign as a witness like anyone else who meets the ordinary qualifications, and his being a creditor gives the court no reason to treat his attestation as tainted or his signature as one short of the required number.
Why the debt does not disqualify
The concern behind witness qualifications is that a witness should not have an interest in the dispositions the will makes, an interest that could tempt him to support a document he ought to be attesting impartially. A creditor's claim is different in kind. He is paid because the estate owes him, whether or not there is a will at all; his right rests on the debt, not on any gift in the instrument. A general charge on the estate for debts is simply the estate meeting its obligations, and that carries none of the conflict that a beneficial interest under the will would.
The contrast with a witness who is given a gift
The distinction worth drawing is between a creditor and a witness who is also left something by the will. A witness stands to gain nothing improper from attesting merely because the estate owes him a debt. A witness who is himself named to receive a devise or legacy is in a materially different position, and the law responds to that interest separately, typically by striking down the gift to him rather than the will. So a creditor may witness freely; a beneficiary who witnesses puts his own gift, not the will, at risk.
What this means in practice
If the testator asked a person he owed money to serve as one of the witnesses, the will is not weakened by it, and that witness may later testify to its execution at probate. The creditor's claim against the estate is unaffected too: he remains entitled to be paid what he is owed as a debt of the estate, in the ordinary course of settling it, quite apart from having signed the will. If you are choosing witnesses, the one category to keep clear of is anyone who is also to receive a gift under the will.