When Do You Need a Licensed Insolvency Trustee?Nov 21, 2018
When you realize your debt has become unmanageable or overwhelming, a Licensed Insolvency Trustee (LIT) might not be the first financial professional you think of. In fact, many Canadians might not even be familiar with LITs.
Financial Literacy Month in Canada is the perfect time to learn something about finances you didn’t know before – like how to know when you need a Licensed Insolvency Trustee.
Formerly known as Bankruptcy Trustees, these debt professionals are now officially known as Licensed Insolvency Trustees. That doesn’t mean they assist individuals only with bankruptcies though. So what exactly is a Licensed Insolvency Trustee? Here’s a formal definition:
“A Licensed Insolvency Trustee is a professional licensed by the government to provide services to people who are having difficulties with their debt.”
In fact, LITs are the only professionals licensed by the government to assist you with formal debt solutions called a consumer proposal and personal bankruptcy. The role of an LIT is to make sure you make an informed decision about how to get out of debt. An LIT will help you find the right debt solution for your unique situation.
What happens when you meet with a Licensed Insolvency Trustee?
Dealing with heavy debt and the associated stress it brings can make you feel alone and isolated. You may not want to talk with friends or family about your debt problems because you feel embarrassed or ashamed. But, being worried about your debt is not as unusual as you might think.
Three-quarters of Canadians carry some amount of personal debt, and nearly one-quarter of admit their debt is overwhelming and they don’t know what to do. One recent Manulife poll found that one-in-three Canadians say that their debt worries keep them up at night.
Speaking with an LIT for the first time provides an opportunity for you to get help, guidance and advice on how to deal with your debt situation. It’s completely confidential and the first consultation is no-obligation and no-cost.
An LIT will explain what debt relief options are available including budget restructuring, consolidation loans, debt management plans, credit counselling, consumer proposals and personal bankruptcy. Then, you’ll discuss which solution would be best suited to help you address the debt problems you currently face.
During the initial consultation, if you and your LIT determine that you don’t need to proceed with a consumer proposal or bankruptcy, he or she can refer you to another trusted debt or financial professional to help you with budgeting, money management, a consolidation loan or credit counselling to help you reduce your debt.
If you decide to work with an LIT, what can you expect?
Your LIT will initiate the consumer proposal or bankruptcy process on your behalf. They will keep you informed throughout the entire process and answer all of your questions. The good news for you is that they deal directly with your creditors, so you don’t have to.
If you want to learn more about formal, legal debt solutions, you can visit the Consumer Proposal and Bankruptcy pages on our website. The Government of Canada website also has an entire section for consumers about these options called You Owe Money. We encourage you to check it out.