A Licensed Insolvency Trustee (LIT) is a federally licensed debt professional who helps individuals and businesses unable to pay their debts. Formerly called bankruptcy trustees, they were renamed in 2016 to reflect their broader role beyond bankruptcy.
LITs are the only professionals in Canada authorized to file consumer proposals and personal bankruptcies.
While credit counsellors assist with budgeting and debt consultants provide advice, only LITs can advise on financial difficulties and administer legally regulated insolvency processes to eliminate debts.
Source: Office of the Superintendent of Bankruptcy – What is a Licensed Insolvency Trustee?
Who regulates Licensed Insolvency Trustees?
The Office of the Superintendent of Bankruptcy licenses every LIT in Canada and enforces the Bankruptcy and Insolvency Act. Fees are set by the federal government, not by individual trustees. If something goes wrong, you can file a complaint with the OSB, knowing it will be reviewed.
LITs act as impartial administrators with obligations to both you and your creditors. The Bankruptcy and Insolvency Act requires trustees to treat everyone fairly throughout the process.
What does a Licensed Insolvency Trustee do?
A Licensed Insolvency Trustee looks at your whole financial picture: what you own, what you owe, what’s coming in, and what’s going out.
LITs are required by law to explain all your debt relief options, not just insolvency. That might be a consumer proposal or bankruptcy, but it could also be debt consolidation or a budgeting plan.
There’s usually more than one way forward. A good trustee walks you through all of them so you can make an informed decision.
What happens when I file a consumer proposal or bankruptcy?
When you proceed with a consumer proposal or bankruptcy, your LIT handles all paperwork, files the documents with the government, and deals directly with your creditors on your behalf.
Once filed, a legal stay of proceedings takes effect immediately. Collection calls, wage garnishments, and lawsuits stop.
Your LIT reviews creditor claims for accuracy, distributes payments, and conducts the two mandatory counselling sessions.
In bankruptcy cases, LITs seize non-exempt assets and sell them for the benefit of creditors.
At completion, your LIT applies for your discharge certificate or certificate of full performance. That’s the document that officially frees you from your debts.
How is a Licensed Insolvency Trustee different from a debt consultant?
Licensed Insolvency Trustees and debt consultants serve different functions. These differences matter more than most people realize.
| Feature | Licensed Insolvency Trustee | Debt Consultant |
|---|---|---|
| Regulated by | Federal government (OSB) | No regulation |
| Can file consumer proposals | Yes | No |
| Can file bankruptcies | Yes | No |
| Fee structure | Government-regulated tariff | Unregulated |
| Professional standards | Mandatory code of ethics | None required |
| Legal protection from creditors | Yes (stay of proceedings) | No |
| Complaint process | OSB formal review | None |
LITs are federally regulated professionals operating under strict oversight.
Debt consultants can offer advice and services related to debt relief, but they are not licensed to administer legal debt solutions such as bankruptcies or consumer proposals.
Clients often pay thousands to debt consultants before coming to me, only to file a consumer proposal anyway. Talk to a Licensed Insolvency Trustee first. The consultation is free.
Source: Office of the Superintendent of Bankruptcy – Code of Ethics for Trustees
How much does a Licensed Insolvency Trustee cost?
Your first consultation with a Licensed Insolvency Trustee is free. That’s standard across the industry, and most LITs offer a free, confidential consultation with no strings attached.
If you proceed with a consumer proposal or bankruptcy, LIT fees are set by the federal government and are included in your payments. These fees are typically deducted from funds collected during the insolvency process, so creditors effectively cover the administration costs from the amounts they receive.
For bankruptcy, the minimum base fee is approximately $1,800. For consumer proposals, fees are deducted from your agreed monthly payment.
Source: Bankruptcy and Insolvency Act – Tariff of Fees
How do you become a Licensed Insolvency Trustee?
Becoming a Licensed Insolvency Trustee requires years of training and examination. LITs are among the most qualified debt professionals in Canada.
Most begin with a background in accounting or finance. Candidates then complete the Chartered Insolvency and Restructuring Professional Qualification Program. The CIRP program covers the Bankruptcy and Insolvency Act, corporate insolvency, personal insolvency and financial counselling.
After completing the CIRP program, candidates must pass the Competency-Based National Insolvency Examination, the Insolvency Counsellor’s Qualification Course, and finally a court exam administered by the Office of the Superintendent of Bankruptcy.
Once licensed, LITs must meet ongoing professional development and continuing education requirements.
When should you talk to a Licensed Insolvency Trustee?
You don’t need to be in crisis to book a consultation. There’s no minimum debt amount, no eligibility test, and no obligation to proceed. You’re also under no obligation to proceed with the first LIT you meet. If the fit isn’t right, talk to another one.
Signs that a consultation might be helpful include:
- only making minimum payments without reducing your balances
- using one credit card to pay for another
- getting collection calls
- facing wage garnishments
- lying awake at night worrying about money.
A good Licensed Insolvency Trustee listens to your story and helps without judgment. My job is to give you the full picture so you can decide what makes sense. A conversation costs nothing.
Talk to a Licensed Insolvency Trustee
If you’re dealing with debt that feels unmanageable, talking to a Licensed Insolvency Trustee is a sensible first step. The consultation is free, confidential, and carries no obligation.
Our Licensed Insolvency Trustees give you straight answers, not sales pitches. Most people leave their first meeting knowing exactly where they stand.
Free debt relief consultation
Talk to a Licensed Insolvency Trustee and discover debt relief solutions that eliminate your debt.
- Reduce debt by up to 80%
- Stop collection calls
- Lift wage garnishments
- End all legal action
- Freeze interest + charges
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Frequently Asked Questions
What is the difference between a Licensed Insolvency Trustee and a bankruptcy trustee?
They’re the same thing. In 2016, the Office of the Superintendent of Bankruptcy changed the official title. The new name makes more sense because most clients file consumer proposals, not bankruptcies.
Do Licensed Insolvency Trustees work for creditors?
LITs act as officers of the court, with duties to both debtors and creditors. We don’t represent either side.
As a Licensed Insolvency Trustee, I work with both you and your creditors. The Bankruptcy and Insolvency Act requires us to treat everyone fairly throughout the process.
Will a Licensed Insolvency Trustee automatically file for bankruptcy on my behalf?
No. We’re required by law to explain all your options. In my experience, many people who come in expecting to file for bankruptcy end up filing a consumer proposal instead. Some find they don’t need a formal filing at all. My job is to find what works for your situation, not to push you toward anything.
How long does the insolvency process take?
For a first-time bankruptcy without complications, you’re typically discharged in nine months. Consumer proposals can run for up to five years, though you can pay them off early with no penalty. We help create repayment plans that reflect what you can actually afford.
Can a Licensed Insolvency Trustee stop wage garnishments?
Yes. Once you file a consumer proposal or bankruptcy, a legal stay of proceedings takes effect immediately. Your creditors must stop all collection actions, including wage garnishments, lawsuits, and collection calls. That protection begins the day you file.
Do I need to meet any requirements to book a consultation?
Anyone can book a free consultation, regardless of how much debt you have or your income. There’s no commitment. It’s simply a chance to understand where you stand.
What should I bring to my first meeting with a Licensed Insolvency Trustee?
Bring a list of your debts with approximate amounts, recent pay stubs or proof of income, and a rough idea of your monthly expenses. Creditor statements are helpful if you have them. The more complete your information, the more useful the conversation will be.
Can a Licensed Insolvency Trustee help with business debt?
Yes. I work with both individuals and businesses. For sole proprietors, personal and business debts are often tangled together. I can review your business’s financial situation and recommend the best course of action.