Licensed Insolvency Trustees, a new name for Trustees! This new name replaces “Trustee in Bankruptcy” or, in French “Syndic de faillite.”
The Office of the Superintendent of Bankruptcy Canada (OSB) made this change, effective on April 1, 2016. The change was made to more accurately reflect what trustees do. Trustees don’t only handle bankruptcies as the old name suggested.
Licensed Insolvency Trustees, a New Name for Trustees: Here are some more reasons for this change.
The term “Licensed Insolvency Trustee” is more general and inclusive. Since an LIT’s role is not limited to bankruptcy, our professional title should reflect the work we do.
A more modern title was necessary to distance ourselves from the stigma associated with the term “bankruptcy”. The use of a new and more appropriate title is the solution for:
- Correctly describing the role of LITs;
- Communicating the solutions we can offer people who are looking for debt relief.
Licensed Insolvency Trustees, a New Name for Trustees: A more accurate description of what we do
In recent years, the profession has developed to include numerous functions relating to insolvency. LITs now offer the following:
- Consumer Proposals
- Commercial or individual bankruptcy
- Proposals for businesses
- Monitoring under the Companies’ Creditors Arrangement Act (CCAA)
- Budget advice
Licensed Insolvency Trustees, a New Name for Trustees: The importance of a more inviting title
For many, the term “bankruptcy” carries a highly pejorative connotation. It is often associated with feelings of guilt, failure, and shame. Consider the term “morally bankrupt”.
Some people refused to consult a Trustee in Bankruptcy, regardless of the state of their finances. However, as insolvency specialists, we offer a number of solutions to achieve debt freedom. In many cases, bankruptcy can be avoided; while still offering a path to debt freedom.
Because of the negative connotation associated with “bankruptcy” some people decided to turn to other resources with less menacing titles, such as credit advisers. In some cases, people are unwittingly exposed to greater financial risk.
Many counsellors in the field of insolvency do not hold a licence and are not regulated by the OSB, as are LITs. They are free to adopt whatever title they choose; “budget counsellor”, “credit counsellor”, “financial coach”, “debt settlement company”, “Debt Consultants” and so on. For more information please refer to these articles on Credit Counsellors and Debt Consultants.
Licensed Insolvency Trustees, a New Name for Trustees: Unique Qualifications of Licensed Insolvency Trustees
Licensed Insolvency Trustees occupy a special category of trust in the insolvency process.
- Trustees are officers of the court;
- Trustees are the only ones who can file bankruptcy or a consumer proposal for people;
- LITs do not work for the debtor or the creditors but have obligations to both.
- Trustees are subject to strict codes of ethics set by the government and the CPAs;
- Trustees retain and disburse monies collected, in trust accounts, subject to audit by the Office of the Superintendent of Bankruptcy;
- Licensed Insolvency Trustees are the only debt professionals who can prevent creditors, including CRA, from taking collection action against people;
- Trustees are the only debt professionals who can stop wage garnishees.
If you have any questions about this or any other matters there are three ways for you to get answers:
- Find a Trustee in your area, where you can make an appointment to see a trustee for a FREE confidential, no obligation consultation or request a Confidential Callback;
- Telephone Toll Free 1-877-879-4770 (24/7) to book a FREE Consultation;
- Use our confidential, anonymous “Ask a Trustee” feature to ask your questions. You will receive your answer within one business day.