What’s the Difference Between a Bankruptcy Trustee and a Licensed Insolvency Trustee in Ontario?
In Canada, the designation Licensed Insolvency Trustee (LIT) is given to those federally licensed and regulated professionals who are trained and certified to provide advice and services to individuals and businesses with debt problems.
“Bankruptcy Trustee” and “Trustee in Bankruptcy” are merely old terms once used to describe what are now LITs. The Office of the Superintendent of Bankruptcy (OSB), which governs the Bankruptcy process in Canada, made the name change back in 2015.
Why did the OSB change the designation from Bankruptcy Trustee to Licensed Insolvency Trustee?
One of the reasons that the OSB made the name change was to reflect the fact that…
Licensed Insolvency Trustees are licensed.
So they incorporated the word right into their designation.
You see, unlike other debt professionals who are not required to have any specific set of credentials, LITs must:
- Complete a specialized accreditation program, ensuring they possess the necessary education to counsel debtors;
- Meet government qualifications;
- Meet a minimum amount of work experience (practical training); and
- Follow a strict code of ethical conduct.
In fact, their education and credentials are often the reason that LITs are regarded as the best and most qualified debt advisors in the country.
Another reason for the name change away from Bankruptcy Trustee is that LITs do a lot more than just help debtors with filing Bankruptcy.
What does a Licensed Insolvency Trustee do?
The primary job of an LIT is to help people make informed choices about how to deal with debt problems. They meet with debtors, review their debts and financial situation, and help them consider all available debt management options, not just Bankruptcy.
LITs are the only debt professionals authorized by the federal government to assist debtors with Bankruptcy and Consumer Proposals.
Any debtor wishing to file a Bankruptcy or Consumer Proposal must do so through an LIT. But these two insolvency options are considered a last resort, reserved only for those debtors who cannot repay their debt in any other way.
What is an LIT’s role in the Bankruptcy or Consumer Proposal process?
- Deal directly with creditors on behalf of the debtor.
- Act as a middle man between creditors and debtor, ensuring all sides do what they’re supposed to during the proceedings.
- Prepare official documents.
- File the necessary paperwork.
- Notify creditors of the insolvency filing, which starts the “automatic stay.” This means once a debtor files a Bankruptcy or Consumer Proposal, creditors are legally obligated to stop all collection calls, wage garnishments, and lawsuits.
- Receive and approve claims from creditors and count their votes in a Consumer Proposal.
- Deal with assets that are not exempt in the Bankruptcy filing.
- Offer debtors financial, budgeting, and money management advice during credit counseling sessions.
- Apply for a discharge or completion certificate so the debtor can be officially discharged from their debts.
Do I need a Bankruptcy lawyer in Canada?
In most cases, the answer is no. In Canada, personal Bankruptcies and Consumer Proposals are administered by LITs, not Bankruptcy lawyers, accountants, or any other debt consultants for that matter. Contrast this to the US, where it is the Bankruptcy lawyers that administer the various forms of Bankruptcy.
I’m having trouble repaying my debts in Ontario. Who should I contact?
If you’re unsure of how to deal with your debt, the first professional you should reach out to is a Licensed Insolvency Trustee. They can help you with all debt relief options available to you.
Call a Licensed Insolvency Trustee in Ontario
Our seasoned experts can assist you with the full range of debt relief options available, from simple budgeting all the way to Bankruptcy.
Your debts aren’t going away on their own. It’s time to take a stand and resolve them.
Call Adamson & Associates Inc. today at 519–310-JOHN (3546) for a free, no-obligation consultation.