In Canada, Licensed Insolvency Trustees provide debt advice and solutions to people and businesses dealing with financial difficulties. They are considered the most qualified debt specialists in the country and can draw on their education and credentials to find the best debt solution for you. Whilst there are various insolvency specialists that can assist with debt management in Canada, such as debt consultants and credit counsellors, it's important to know what your options are when you are experiencing financial difficulty and how a Licensed Insolvency Trustee could help you get back on your feet. In this guide, we'll outline what a Licensed Insolvency Trustee is, what a License Insolvency Trustee does and when you should contact a Licensed Insolvency Trustee.
Put simply, a Licensed Insolvency Trustee (LIT), formally known as a Bankruptcy Trustee, is a financial specialist trained to help people and businesses struggling with their finances or unable to pay their debts.
They will talk you through the different debt solutions available to you, advise you on which debt solution is the most suitable for your financial situation, administer the necessary documentation and oversee the process by communicating with your creditors on your behalf.
Because Licensed Insolvency Trustees are the only federally regulated debt advisors in Canada, their fees are set by the Office of the Superintendent of Bankruptcy Canada (OSB) and they must operate within the rules set out in the Bankruptcy and Insolvency Act (BIA).
A Licensed Insolvency Trustee is legally authorised to provide confidential advice and administer debt solutions to people and businesses dealing with financial difficulties.
They can provide information on the different debt solutions available to you, such as the consumer proposal process and filing bankruptcy, and let you know which option would best suit your financial situation.
With your best interests in mind, Licensed Insolvency Trustees will ensure the debt solution agreed upon is fair and just for everyone involved and that both your and your creditor’s rights are respected throughout the entire process, from the initial consultation to the final settlement.
From providing confidential debt advice to administering and assisting with the consumer proposal or bankruptcy process, the purpose of a Licensed Insolvency Trustee is to ensure people and businesses understand the various insolvency options available to them and can make informed choices to improve their financial situation in the long term.
We have a wide range of debt management solutions that could help you write off up to 80% of your debts
The process of meeting with a Licensed Insolvency Trustee requires a series of steps. This is what you can expect when you reach out for expert debt help from a LIT:
Because everyone’s financial situation is different, you will be required to attend an initial consultation with a Licensed Insolvency Trustee to determine which debt solution would be the most suitable for you.
During this meeting, you will be asked a number of in-depth questions about your debts, assets, income and expenses to give both parties a clearer idea of what you can expect to pay and how long it should realistically take to settle your debts.
This is also an opportunity for you to ask as many questions as you like because, whilst you might have heard about consumer proposals and bankruptcies, their processes are not necessarily common knowledge.
Gather and file documents
If a Licensed Insolvency Trustee believes you are a suitable candidate for a consumer proposal or bankruptcy, they will collect information from you and prepare the necessary documents to be filed with the government.
This could include credit card statements, bank statements, mortgage records and proof of your income and expenses.
Notify your creditors
At this stage, your creditors will be notified that you are entering into a debt solution and will be given the opportunity to accept the terms laid out in your agreement.
This will mark the beginning of your insolvency process and will protect you from creditors, debt collectors, wage garnishments and lawsuits.
Communicate with your creditors
Throughout the insolvency process, your Licensed Insolvency Trustee will communicate with your creditors on your behalf and, if necessary, negotiate to eliminate or, at the very least, reduce interest on the money owed.
They are also responsible for applying for your completion certificate to officially discharge you from your debts when you have completed your consumer proposal or bankruptcy.
Whilst you can be rest assured that your first consultation with a Licensed Insolvency Trustee will always be free, federally regulated fees will be included in the monthly repayments of the debt solution you enter into.
However, because the fees for consumer proposal and bankruptcy services are set by the federal government, you will never be charged any additional fees for using the services of a LIT.
The cost of consumer proposals and bankruptcies depends on a number of factors, including your income, assets and creditors, but whilst your total fees for a consumer proposal will be included in your monthly repayments, you can typically expect to pay a minimum of $1,800 for filing bankruptcy.
Whilst both Licensed Insolvency Trustees and Debt Consultants can provide debt advice to people and businesses experiencing financial difficulties, there are some key differences you should be aware of:
Licensed Insolvency Trustees are regulated by governing bodies, such as the OSB and the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) whilst Debt Consultants are not regulated by any governing bodies.
This, essentially, means that Debt Consultants are not required to meet any strict requirements or have any formal qualifications to provide debt management services.
Licensed Insolvency Trustees can provide debt advice and administer consumer proposals and bankruptcies but because Debt Consultants are not licensed to file debt solutions, they can only help their clients understand the impact of debt and work with them to find a suitable solution to affordably repay their debts.
Debt Consultants are unregulated advisors which means there are little to no restrictions on what they can charge for their services.
However, because Licensed Insolvency Trustee fees are federally regulated, they are, legally, not allowed to overcharge you for the service they provide.
More often than not, a Debt Consultant will simply advise clients to put money aside to allow them to be able to repay their creditors and, whilst this isn’t necessarily poor advice, it doesn’t offer any protection against debt collectors and wage garnishments.
Licensed Insolvency Trustees, on the other hand, have the tools to not only provide the best debt solution for your needs but also administer consumer proposals and bankruptcies which will put a stop to communication and harassment from creditors and debt collectors.
Whether you know you want to file for personal bankruptcy or just want to explore your options, a Licensed Insolvency Trustee should be your first point of contact.
They are experienced in helping people and businesses overcome the most serious of financial problems and can point you in the right direction to settle your debts.
There is no wrong time to consult a Licensed Insolvency Trustee and you don’t need to meet any eligibility requirements to schedule an initial consultation. This is some of the things a LIT can help you with:
Because Licensed Insolvency Trustees play such an important role in the insolvency process in Canada, they must go through a rigorous training and qualification process to ensure they are sufficiently trained to deliver expert debt management services.
This process can take anything between three and ten years depending on existing accountancy experience.
The OSB has the authority, under the BIA, to grant licenses to Licensed Insolvency Trustees that they are satisfied have met strict qualifications. As well as being of good character and reputation and solvent, they must also meet the following requirements: