In this blog we’ll explore Bankruptcy Trustees in more detail, including who they are, how they relate to Licensed Insolvency Trustees, and why you should consider using a bankruptcy Trustee if you’re interested in personal bankruptcy or other formal debt relief options.
What is a Bankruptcy Trustee?In Ontario, ‘bankruptcy trustees’ is a term that’s commonly used to describe Licensed Insolvency Trustees (LITs), who are bankruptcy and finance experts in Canada.
Empowered under the Bankruptcy and Insolvency Act, a Licensed Insolvency Trustee is legally authorized to administer bankruptcies, consumer proposals, and other personal insolvency procedures.
Is a Bankruptcy Trustee the same as a Licensed Insolvency Trustee?In essence, yes. While ‘Bankruptcy Trustee’ is an accepted term, it’s not an official position. In reality, it’s just another way of describing a Licensed Insolvency Trustee.
The origin of the term stems from the fact that Licensed insolvency trustees are heavily involved in the bankruptcy process in Canada.
If you’re considering filing bankruptcy, they can file on your behalf, deal with your creditors, and will be responsible for making sure you meet the terms of the bankruptcy.
Why should I use a Licensed insolvency Trustee?There are thousands of companies and individuals across Canada who advertise themselves as debt consultants and claim to be able to help you improve your financial situation. You should be skeptical of many of these organizations.
Licensed Insolvency Trustees are the only professionals in Canada who are authorized by the federal government to monitor the insolvency process and administer debt relief programs.
If you’re struggling with debts and live in Ontario, you should always make sure any company you are engaging with has access to their own Licensed Insolvency Trustee.
Who authorizes Insolvency Trustees in Ontario?Licensed insolvency trustees in Ontario are licensed by the Office of the Superintendent of Bankruptcy Canada (OSB), which is the branch of the federal government that ensures the Bankruptcy and Insolvency Act is being properly applied.
The OSB grants licenses to all LITs in Ontario – including Debt Relief Canada – makes sure that all licensed insolvency trustees are acting in accordance with the law, and keeps detailed public records of all personal insolvency procedures in Ontario, including consumer proposals and bankruptcy.
As mentioned previously, it’s important to note that Trustees are the only people with the power to administer formal financial solutions in the province of Ontario.
What are the alternatives to Bankruptcy?There are bankruptcy alternatives available to people struggling to keep up with payments in Ontario. Below are some of the most common.
Consumer proposalThe consumer proposal is the most popular debt relief program in Canada and allows you to turn your unsecured debts into a single monthly payment, and write off the debts you can’t afford.
A Licensed Insolvency Trustee will oversee the consumer proposal process, ensure your payments arrive on time, and divide those payments fairly among your creditors.
Credit counsellingUnlike a consumer proposal or bankruptcy, credit counselling isn’t a formal debt solution. Instead, credit counsellors are debt professionals whose job it is to act as a guide and help you with your money problems.
Credit counselling sessions can provide you with useful information on things like how to prioritize your bills, ways to make your money go further, and how to build a realistic monthly budget.
Debt settlementIf you owe money to a creditor and can’t afford the total debt, but may be able to repay at least a portion of it, then debt settlement may be one of the more useful debt relief options for you.
A debt settlement offer is when you approach a creditor with an offer to repay a portion of what you owe (say 70%), in exchange for them writing off the rest. The settlement fee might be paid as a lump sum, or over a fixed period in consultation with your creditors.
What’s the difference between consumer proposals and bankruptcy?Bankruptcy in Canada involves you handing over all of your valuable assets, including your home and your car, and living under extremely strict financial conditions for a fixed period of time, and depending on what you earn, you may breach the surplus income limits and have your bankruptcy extended.
While it can be useful for someone with extremely high debts they have no realistic way of repaying, bankruptcy will have a huge impact on your life, as well as your credit rating, so it should only ever be considered a last resort.
Unlike filing bankruptcy, a consumer proposal lets you keep assets like your home and car while you pay off your debts, and the repayment size is based on your affordability. That means you should be able to live in relative comfort while you deal with your debt.
Where can I find a Bankruptcy Trustee (Ontario)?If you find yourself researching Bankruptcy (Ontario) and looking into various bankruptcy services, then the chances are that you’re in need of reliable debt advice.
That’s where we can help. Debt Relief Canada is a debt management company that helps people in Ontario deal with their debt. Our debt specialists can give you all the information you need while you weigh up whether to file bankruptcy, enter a consumer proposal, or take alternative action to improve your finances.
If you’re worried for your financial future, get debt advice you can trust. Get in touch with us today.