Understanding Licensed Insolvency Trustees (LITs)
Licensed Insolvency Trustees (LITs) are professionals who help people and businesses navigate financial challenges. They provide services like bankruptcy filing, credit counselling, and debt management proposals. Despite their vital role, many people are apprehensive about seeking their help due to the fear of being judged for their financial state. However, it’s essential to understand that Licensed Insolvency Trustees Don’t Judge – their primary role is to provide help.
What is a Licensed Insolvency Trustee (LIT)?
Previously known as a Bankruptcy Trustee, a Licensed Insolvency Trustee is a federally regulated professional who offers a wide range of debt relief services. They can help you manage your budget, provide credit counselling, help with debt management proposals, consumer proposals, and bankruptcy.
The Authority of an LIT
An LIT is a licensed professional who has demonstrated the required skills, knowledge, and experience to offer insolvency services. Their authority comes from the Office of the Superintendent of Bankruptcy (OSB), which also regulates them.
LITs are required to treat all parties involved in the insolvency process fairly, according to their rights under the Bankruptcy and Insolvency Act of Canada. They are also subject to oversight by the OSB and must adhere to federally regulated standards of practice, such as the Code of Ethics for Trustees.
Identifying a Licensed Insolvency Trustee
There are about 1,000 individuals and 200 corporations in Canada licensed to act as Licensed Insolvency Trustees.
If you’re dealing with debt and need professional help, you can confirm if a person is a bankruptcy trustee (LIT) in Canada by searching the Superintendent of Bankruptcy website.
How does an LIT Help?
LITs offer free initial consultations, review financial situations, and determine the best options for individuals or corporations in dealing with their creditors. They file either a consumer proposal or bankruptcy on your behalf, which legally stops your creditors from pursuing any collection action against you.
LIT’s Fees
The fees charged by LITs are regulated by the federal government. They do not charge for the initial consultation. Since the fees are the same regardless of the LIT you work with, it’s important to ensure you’re working with someone you trust and can rely on, as your relationship with them can last anywhere from nine months to five years.
Why do you need an LIT?
Only a Licensed Insolvency Trustee can legally file a bankruptcy or consumer proposal on your behalf. Many people, when researching their debt options, believe that bankruptcy is their only choice. However, after speaking with an LIT, many individuals find other alternatives such as credit counselling, debt management plans, or a consumer proposal.
At the first meeting with an LIT, you’ll be asked to provide information about your debt, income, assets, and monthly financial obligations. The LIT will then lay out the options available to you and guide you towards the best solution.
The Role of an LIT
A Licensed Insolvency Trustee does not judge you based on your financial situation. Instead, they work with you to:
- Evaluate your financial situation and present all viable debt relief options, with no obligation on your part
- Assist in preparing paperwork to present to your creditors
- File either your consumer proposal or bankruptcy documents
- Deal with your creditors by notifying them of your bankruptcy or proposal and ensuring you are protected from them
- Administer your consumer proposal or bankruptcy
- Deliver two mandatory counselling sessions on budgeting and rebuilding credit as part of the financial recovery process
- Ensure you are discharged from your bankruptcy or proposal.
The Benefits of Bankruptcy
Bankruptcy can provide several benefits, including:
- Complete elimination of most of your debts
- Retention of your house, vehicle, and investments in most cases
- Immediate halt to any legal actions, judgments, garnishments, and other collections efforts
- The cost of bankruptcy is generally based on your income
- In almost all cases, LITs deal with your creditors and no court appearances are required
- The process ranges from 9 months to 3 years, depending on your income level and if you have any prior bankruptcies.
Conclusion
Licensed Insolvency Trustees provide a variety of services, with the most crucial one being debt relief. If you’re struggling financially, consider booking a free consultation with a Licensed Insolvency Trustee. Remember, Licensed Insolvency Trustees Don’t Judge – their goal is to help you find a debt solution that suits your unique needs.
