Licensed Insolvency Trustee or Bankruptcy Trustee?: Which Do I Need

Do I Need a Licensed Insolvency Trustee or Bankruptcy Trustee?

Personal debt can become a trap for many Canadians.

In order to keep up with the cost of living, households can accumulate more and more loans and credit cards until their debts reach a point at which they’re extremely difficult to control.

In some circumstances, bankruptcy may be the only way to get the financial fresh start they need and deserve.

But when filing for bankruptcy, you need the help of a Trustee to arrange terms with your creditors and help you to avoid your bankruptcy going to court.

When researching your options, you may have heard the term Licensed Insolvency Trustee used rather than the more traditional Bankruptcy Trustee in recent years.

Here we’ll look at the difference between these two terms and what a Trustee can do for you in taking control of your debts.

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What’s the difference?

In terms of the service offered, there’s really no difference.

It’s simply a matter of terminology.

In December 2015, the Office of the Superintendent of Bankruptcy (OSB) ordered individuals licensed to provide services under the Bankruptcy and Insolvency Act (BIA) to identify themselves as Licensed Insolvency Trustees.

While the services they offer remains the same, the new name is a more accurate reflection of how they can help you.

A Licensed Insolvency Trustee’s ability to assist you is not merely limited to bankruptcy.

Indeed, part of their legally mandated job is to carefully examine your financial circumstances and ensure that you’re aware of all options available to you in managing your debt.

Rather than merely facilitating arrangements for personal bankruptcy, they will help to guide you towards making an informed decision that allows you to do right by your creditors without imperilling your household financially.

Click Here to find a Licensed Insolvency Trustee near you.

How a Licensed Insolvency Trustee can help with Bankruptcy

A Licensed Trustee can advise whether bankruptcy is the best (or only) option available to you if your debts have escalated beyond your ability to reasonably manage.

They will explain to you the benefits and ramifications of bankruptcy and help you to make an informed choice.

They will help you to get all the necessary paperwork in order and ensure that you’re able to meet the requirements expected of you within the first 9 months of bankruptcy.

This will ensure that your bankruptcy ends in an automatic discharge rather than seeing the inside of a courtroom.

How a Licensed Insolvency Trustee can help with Consumer Proposals

If you’re unable to arrange a debt management plan with your creditors (or you owe money to the CRA who do not enter into debt management plans with individuals) bankruptcy is not the only available option.

You may instead be able to make a Consumer Proposal.

In this instance, a Licensed Insolvency Trustee can act as a Proposal Administrator acting on your behalf.

They will be able to help you come up with repayment terms that do not necessarily require you to pay off 100% of the principal while also waiving interest, fees and charges.

This proposal will then be put to your creditors.

If a majority (51% or over) agree to the terms, then all creditors (and you, the debtor) are legally bound by them.

As you can see, this is advantageous in a number of ways.

You get to avoid wasting a fortune on interest and charges while also potentially driving down the amount owed and rearranging debts into more manageable repayments- either as a lump sum or monthly instalments.

However, it’s important to remember that Consumer Proposals have a similar effect on your credit rating as a bankruptcy and can remain on your record for around 7 years.

Unlike a bankruptcy, however, Consumer Proposals ensure that your property is protected.

You can find out more about Consumer Proposals and how they differ from bankruptcy here.

How we can help

When you’re plagued by personal debt it can feel as though you’re alone.

But this is far from the case.

Our team of licensed experts are here to ensure that you understand all your options and are able to make an informed decision that helps you to take control of your debt and make a new start for the future.

Call us now on (877)879-4770 for a 100% confidential, risk-free and zero obligation callback.

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