Regain Control of your Debt

Date: Aug 15, 2019
By: Louise Dyck, Qualified Insolvency Counsellor

Are you facing insolvency? Our Licensed Insolvency Trustees (LITs) are here to make your financial success possible. 

It’s very challenging to regain control of debt that has spun out of control. If you have thought of contacting a Bankruptcy Trustee, you are on the right track. But due to a name change in recent years, you will actually need to contact a Licensed Insolvency Trustee (LIT). LITs offer the same insolvency services as Bankruptcy Trustees. As of 2016, the Office of the Superintendent of Bankruptcy changed the title because many people mistakenly thought that trustees only offered bankruptcy. In reality, Licensed Insolvency Trustees are experts in all matters related to insolvency and are one of the best professionals to help you avoid a state of bankruptcy. 

This is in large part due to the fact that Licensed Insolvency Trustees are required by law to explain every possible debt solution. LITs are the only insolvency professionals in Canada that undergo specialized training and are licensed by the federal government. As a result, LITs are legally equipped to actually make a difference by reducing your debts and offering creditor protection. A consumer proposal, for instance, can only be administered by a Licensed Insolvency Trustee. Don’t waste valuable time and money on ineffective debt plans. By knowing what your options are, you can significantly change your financial outcome. 

A poll of Canadians prior to the name change from ‘Bankruptcy Trustee’ to ‘Licensed Insolvency Trustee’ revealed several misconceptions:

  1. The number one misconception was that Bankruptcy Trustees (LITs) only dealt with bankruptcy when, in reality, they offer many different types of debt relief. Most people also had no idea that you can book a consultation with a licensed trustee to learn about the best options to manage your debt. Bankruptcy Trustees (LITs) are actually best equipped to help you find alternatives to bankruptcy. 
  2. Not many people knew that a Consumer Proposal can only be filed by a licensed trustee, or that proposals are the top alternative to bankruptcy. 
  3. Over half of those interviewed believed that credit counselling agencies are federally licensed and regulated (they are not) and, as a result, were unaware of their limitations when it comes to actual debt relief or creditor protection. 
  4. Finally, a large percentage of people reported that they were less inclined to contact a Bankruptcy Trustee because of the association with ‘bankruptcy.’ 

In order to better represent the role of a Bankruptcy Trustee, the OSB officially changed their title to ‘Licensed Insolvency Trustee.’ The new title is much more descriptive and doesn’t create an over-emphasis on bankruptcy. It’s inevitable that in some cases bankruptcy is the only option, but your LIT will first exhaust all other possibilities first. While bankruptcy is not ideal, it does give the opportunity to clear your debt once and for all and start over.  

  • Licensed – a person who has been licensed by the Office of the Superintendent of Bankruptcy is regulated by that governing body and the federal government. The OSB ensures that every Licensed Insolvency Trustee is held to the same standard of practice. Consumer proposals and bankruptcy cannot be administered by any professional who does not have a trustee license. 
  • Insolvency – this refers to unpaid debts, which include but are not limited to credit cards, phone bills, student debt, lines of credit, etc. Licensed Insolvency Trustees are trained to find resolutions for insolvency. 
  • Trustee – indicates that the person has legally been entrusted as an officer of the court who is accountable under the Bankruptcy & Insolvency Act. 

What is a Consumer Proposal? 

Consumer proposals are one of the top choices for debt relief in Canada for those who are unable to manage their debt. In most cases, a person will only be required to repay between 30-40% of what they originally owed to creditors. All your unsecured debts will be consolidated into a single payment every month. All consumer proposals are of zero interest. Your assets are safe, and you will never pay more than you can financially afford. You will work side-by-side with your Licensed Insolvency Trustee to create a proposal for your creditors based on your budget and what you are able to repay. When it comes time to negotiate with creditors directly, your Licensed Insolvency Trustee will speak on your behalf. You are also guaranteed immediate protection from creditors. This means you don’t have to worry about wage garnishment or being hounded by collection calls. The length of a proposal can vary from a few months up to 5 years. A longer term usually means smaller payments. During your proposal, you will also be required to attend two debt counselling sessions in order to set you up for financial success. 

How does a Licensed Insolvency Trustee (LIT) become an expert in their field? 

It is very common for a licensed trustee to have a university degree along with several years of experience in accounting or a similar field. In order to be granted a license, they must take several courses designated by the OSB, including a three-year law class. Following these courses are written and oral exams. These exams are very challenging, and on average, only 1 in 4 candidates will pass. Keep in mind that a passing grade does not guarantee that the Superintendent of Bankruptcy will grant a license. Because Licensed Insolvency Trustees are members of the court, the screening process must extend beyond grades alone. Every candidate must also have a complete investigation by the RCMP. The Superintendent will also want to review their personal history and reputation to ensure that they: 

  • Have proven long-standing good character 
  • Have successfully passed all examinations
  • Have a clean record with the RCMP 
  • Do not have any history of insolvency

Even when a license is granted, the new LIT will be mentored and closely monitored as they start out in their new role. Even seasoned LITs receive ongoing training to ensure that they can offer the best standard of care. The OSB is in place to ensure that every Licensed Insolvency Trustee gets the job done right. 

Do you really know what all your options are?   

When it comes down to making important financial decisions that could affect you for many years to come, you want to have all the facts. Fortunately, all Licensed Insolvency Trustees have a legal obligation to make sure that you know and understand every possible option. With this information, you can best decide how you want to proceed. Certain debt consulting agencies are not held to the same law. This means that there is no guarantee of the information that you receive – that is complete or otherwise. Because these agencies are not licensed by the OSB, they are also unable actually to reduce your debt or give you creditor protection. Depending on your circumstance, this may be a significant factor for you. With a LIT, you can also rest easy knowing that any fees you encounter are regulated. This means that rates are fair, always clearly explained, and universal across Canada. 

Your first initial consultation is always free of charge. That consult is also one of the most important appointments you will have with your licensed trustee. Some clients are surprised to find that they only need some credit counselling or the help of an accountant to get back on track. Other cases might are more complex and require a plan for debt resolution. In either case, your Licensed Insolvency Trustee will make sure you have the full picture.   

At Lazer Grant: 

  • Your first consultation with a LIT is free
  • Our LITs will make sure you understand all your options 
  • We offer many different solutions for insolvency  
  • Every LIT is licensed to file consumer proposals 
  • Every LIT is licensed to file bankruptcy 

Most Frequently Asked Questions: 

  • What is a Bankruptcy Trustee or LIT? 

Bankruptcy Trustees, now known as LITs, are insolvency experts licensed by the federal government and overseen by the Office of the Superintendent of Bankruptcy. They can evaluate your financial situation to find the best solution for you. Only LITs can administer consumer proposals and bankruptcy, offer debt relief, or creditor protection. 

  • What is the difference between a Licensed Insolvency Trustee (LIT) and a credit councillor? 

Firstly, Licensed Insolvency Trustees have a legal duty to ensure that you know and understand ALL possible options. LITs also go through years of training and testing before they are granted a license. They are also licensed to administer consumer proposals and bankruptcy and offer creditor and CRA protection. Credit councillors, on the other hand, do not have a governing body or mandatory training. They cannot provide formal debt relief or stop collection action. 

  • Do Licensed Insolvency Trustees (LITs) handle creditor negotiations? 

Licensed Insolvency Trustees are trained to be able to negotiate with creditors on your behalf. 

  • What type of training is required for a Licensed Insolvency Trustee (LIT)? 

LITs must complete several years of courses, written and oral exams, and an RCMP investigation before the Superintendent of Bankruptcy will grant a license. It is notoriously difficult to get a license, and many do not pass, but the process ensures that every licensed trustee is an expert.  

  • Who is in charge of overseeing Licensed Insolvency Trustees (LITs)?

The Office of the Superintendent of Bankruptcy (OSB) oversees the education and licensing of LITs. They can also be easily contacted if a person wishes to file a complaint about a licensed trustee.  

  • What kind of fees can I expect? 

As with any type of credit counselling, there are usually fees for some services. However, the OSB regulates fees across all licensed trustees. You will always know what to expect. At Lazer Grant, we ensure there are no surprise bills. 

Do you want to speak to a Licensed Insolvency Trustee (LIT) today? Call 1-204-942-0300 today! 

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