The Trustee in Bankruptcy Designation Has Changed to Licensed Insolvency Trustee (LIT )
You may have heard or read the term “Licensed Insolvency Trustee” recently and you might be wondering what it means. In December 2015, the Office of the Superintendent of Bankruptcy (OSB) issued a directive that individuals who are licensed by the Superintendent of Bankruptcy to provide services under the Bankruptcy and Insolvency Act (BIA) are to identify themselves as Licensed Insolvency Trustees (LIT).
Previously, such individuals were known as bankruptcy trustees or trustees in bankruptcy.
This change in designation does not change the services that are provided by a trustee. However, it does clarify the profession. In the past, many people assumed that a bankruptcy trustee only assisted people in filing for bankruptcy. This makes sense, since the word “bankruptcy” was right in the name. By referring to themselves as “Licensed Insolvency Trustees,” these individuals are more accurately describing what they do.
A Licensed Insolvency Trustee is the only person who is registered with and licensed by the federal government to administer bankruptcy and consumer proposal services under the federal Bankruptcy and Insolvency Act.
In order to become a Licensed Insolvency Trustee, a person must receive years of training and pass a comprehensive examination. Licensed Insolvency Trustees are bound by a strict code of ethics.
What’s the difference between a Licensed Insolvency Trustee and a licensed Trustee in Bankruptcy?
Nothing. There are no changes to the services provided by a trustee. However, the terms “trustee in bankruptcy” and “bankruptcy trustee” will be retired in favour of the more accurate term.
Working with a Licensed Insolvency Trustee
If you are having difficulties meeting your financial obligations and paying your debts as they become due, speaking with a Licensed Insolvency Trustee is a good idea. A trustee typically provides the initial consultation at no charge. This means that you can have your financial situation reviewed by a trained and experienced professional at no cost to you.
During this consultation, the trustee will review your finances and provide you with information on the options that are available to you. A trustee will not just give you details on the solutions that he or she can administer. As mentioned, Licensed Insolvency Trustees follow a strict code of ethics. Thus, they will provide you with information on all available options. This is different from many other people who provide financial advice, as these other individuals may only give you information on the one or two options that they know best.
It’s also important to note that a trustee will never pressure you into choosing a particular option. The job of the trustee is to give you the information that you need to make an informed decision for yourself. You are always in complete control of decisions regarding your financial future.
Licensed Insolvency Trustees and Consumer Proposals
One option that may be available to you is a consumer proposal. A consumer proposal is a legal process through which a person makes an offer to his or her creditors to repay debt on terms that they can afford.
In most cases, a consumer proposal involves repaying a portion of your debt in monthly payments over a specific period of time. Once the proposal is complete, the remaining outstanding debt is eliminated. A consumer proposal can be a good option for someone who is able to afford to pay back some of their debt, but not the full amount.
If you decide to file a consumer proposal, a Licensed Insolvency Trustee will review your financial situation and determine what a fair offer to your creditors will be. The trustee will then complete the required paperwork and submit the offer for a vote by your creditors.
Once you have filed a consumer proposal, your creditors are not able to contact you directly. All communication will be done through your trustee.
Licensed Insolvency Trustees and Bankruptcy
Another option is personal bankruptcy. This option is available to those who are unable to pay their debts as they become due. While bankruptcy is typically the last option pursued, it is still a viable and helpful option for many people who are having financial difficulty.
Filing for bankruptcy gives you an opportunity to eliminate most (if not all) of your debts and start fresh. If you decide to file for bankruptcy, your Licensed Insolvency Trustee will ensure that all required paperwork is completed and submitted correctly. The trustee will also review your assets and make sure that you are able to keep those assets that are considered exempt in your province.
Much like with a consumer proposal, your creditors are not able to contact you directly once you file for bankruptcy. Your Licensed Insolvency Trustee will handle all communication with your creditors.
As you can see, a Licensed Insolvency Trustee provides important services to assist those who are having financial difficulties and trouble with debt.