Licensed Insolvency Trustee

What does a Licensed Insolvency Trustee do?

A licensed insolvency trustee (LIT) is a federally regulated professional.

LITs can provide individuals and businesses with a range of options to deal with debt. If you proceed with a proposal or bankruptcy, LITs handle creditors on your behalf. There is a fee for using a LIT, however, it is federally regulated and fairly priced. Also, LITs usually do not charge a fee for the preliminary consultation.

Licensed insolvency trustees work with the Government of Canada. More specifically, they represent the Office of the Superintendent of Bankruptcy Canada. For a LIT to be eligible for work, he or she must reach a certain level of training and become licensed.

The Government of Canada does not employ them. They often are accountants employed by a debt services company that steps in as a LIT.

What authority does a Licensed Insolvency Trustee have?

A LIT works with the Office of the Superintendent of Bankruptcy. The Superintendent of Bankruptcy is responsible for regulating the LIT profession. They license and monitor LITs by referring to the Bankruptcy Act.

In addition to the Bankruptcy Act, the Superintendent of Bankruptcy has a code of ethics for LITs, who must adhere to the applicable regulations. Their authority starts and stops concerning these regulations. These regulations protect debtors and creditors. Given the expertise of a LIT, you don’t have to worry about scams or manipulation as you would with creditors.

Usually, a LIT is an accountant by trade that specializes in dealing with debt. They often come from a bankruptcy firm and step in to work with the Superintendent of Bankruptcy. While they work with the Superintendent of Bankruptcy, ultimately a LIT is an officer of the court.

If they make an error in the process, the onus is on the LIT, not the Superintendent of Bankruptcy. Because of the duty of care, a LIT must exercise, they have a lot of authority and discretion. It is their responsibility to follow the BIA and treat all stakeholders appropriately.

A LIT must meet with an individual before executing legal action. They cannot put a financial legal proceeding into action without understanding the circumstances. The purpose of the first meeting is to perform a debt assessment. They may find that the struggling individual has other options that aren’t as severe.

Sometimes an individual has other financial options. Other times, a consumer proposal or bankruptcy is the best solution. A consumer proposal is less serious than a bankruptcy. It does not involve the LIT taking control of your assets.

Bankruptcy is more serious but sometimes necessary. If so, a LIT takes control of your assets and liabilities. This is the lawful process defined in the Bankruptcy Act.

Once your assets and liabilities are in the hands of your LIT, they are responsible for settling the debt. LITs are highly trained professionals and help navigate individuals through the complex process.

What is the role of the Licensed Insolvency Trustee?

The role of a Licensed Insolvency Trustee remains unchanged. An LIT will still:

• Meet with you before you sign to review your debts and your financial situation in order to help you find the best debt management solution available. That may or may not include any type of insolvency proceeding under the Bankruptcy & Insolvency Act. The role of a Licensed Insolvency Trustee is still to help you consider all of your options, not just bankruptcy.
• Collect information from you and prepare the necessary documents to be filed with the government. This is the official start of your insolvency proceeding, whether it be personal bankruptcy or a consumer proposal.
• Notify your creditors, accept and review all claims, and otherwise administer the insolvency process. For consumer proposals, that includes recording votes to determine if a proposal has been accepted by creditors.
• Ensure you complete all necessary duties and apply for your discharge or completion certificate, based on the type of insolvency proceeding you choose.

In the end, the important point is that the professional you work with is licensed and has the training and experience needed to help you eliminate your debt. Licensed Insolvency Trustees are just those experts.

8 reasons why you should work with a Licensed Insolvency Trustee

There are a lot of different types of debt advisors in Ontario and across Canada including federally Licensed Insolvency Trustees, accredited not-for profit credit counsellors to for profit debt consultants. Here are 8 reasons why you should consider contacting a Licensed Insolvency Trustee:

• Licensed Insolvency Trustees are the most highly trained and educated debt advisors in Canada. Almost all Licensed Insolvency Trustees have an accounting designation and a university degree. All must complete and pass a rigorous bankruptcy and law course and be investigated by the RCMP before being granted a Trustee license. Talking with a LIT ensures that you are getting qualified advice.
• A Trustee is not just for bankruptcies. Trustees consult with individuals looking for solutions to their debt problems every day. Not all end up going bankrupt. Some will file a consumer proposal but even more will be provided with suggestions and solutions that will allow them to deal with their debts on their own. A Licensed Insolvency Trustee is the only debt professional required by their mandate, under law, to explain all your debt relief options. They can help you evaluate other debt settlement or debt relief programs. They can be a great second look.
• Your initial consultation is free. Trustees offer free, no-obligation consultations to review your debt relief options. There is no fee just to talk with a Licensed Insolvency Trustee about your situation. No up-front fees, no pressure. You really have nothing to lose by contacting a Trustee for advice.
• Options available through a trustee cost less than other debt solutions. In terms of debt relief options, in most cases, it will cost you less to work with a Licensed Insolvency Trustee than other debt consultants. Bankruptcy payments are based on government guidelines called surplus income limits, and proposal payments are based on a settlement of your debt for much less than you owe, resulting in a payments that are often 20 to 30 cents on the dollar. Compare this to a debt management plan through a credit counselling agency that requires you to repay 100% of your debts. All trustee fees are included as part of your bankruptcy or consumer proposal payments. There are also no extra, hidden or up-front fees to worry about unlike unlicensed debt consultants.
• A Trustee doesn’t work on your creditor’s behalf. This is one of the biggest myths surrounding licensed insolvency trustees there are. The Trustee makes sure that both your rights, as the debtor, and the creditor’s rights are respected. They ensure that the process is fair for all involved and that everyone follows the rules.
• A Trustee and insolvency proceeding protects you. When dealing with a Licensed Insolvency Trustee, you are protected by the fact that they are regulated by the federal government, that they follow a stringent code of ethics, and that there is a mechanism in place to mediate any disputes you might have. When you file, there is a legal stay of proceeding that protects you from further actions by your creditors including a wage garnishment and harassing phone calls.
• A Licensed Insolvency Trustee can guide you through the process. Filing bankruptcy or a consumer proposal is a legal process and having a licensed Trustee on your side can help you manage it efficiently and quickly. Your trustee will answer all of your questions about how to file bankruptcy or how a consumer proposal works. Our goal is to make sure you are successful in receiving your discharge and that you ultimately eliminate your debts.
• You should choose a Trustee you’re comfortable with. Find an experienced Trustee who you can trust and build a relationship with is essential, because you will be working with them for at least 9 months. Your trustee should answer your questions and make sure you understand the process before you file and should be willing to provide support about the process both during and after your bankruptcy.