LITs are finance and bankruptcy specialists who have received training and are licensed by the federal Office of the Superintendent of Bankruptcy (OSB) to inform the general public about debt relief options and to administer insolvency processes.
Trustees are legally allowed to administer certain financial matters. Insolvency Trustees administer debt relief and insolvency processes. They help people find suitable debt relief options for their financial problems and help resolve financial issues that may arise between debtors and creditors.
LITs are the only professionals in Canada that are legally able to administer insolvency processes such as customer proposals or bankruptcies.
About Bankruptcy Trustees In Canada
Bankruptcy trustees or Licensed Insolvency Trustees are licensed professionals who are empowered by the Government of Canada to supervise and administer consumer proposals and bankruptcies.
In Canada, you cannot file for bankruptcy or for a consumer proposal on your own. An LIT helps you file the necessary documents, and they administer the rules of the bankruptcy or consumer proposal process so that everyone involved complies with their responsibilities and duties under the law.
It’s important to note that, even though you may contact an LIT to help with your bankruptcy, they do not work for you at any given time. Licensed Insolvency Trustees do not take sides in a bankruptcy process.
They act as referees who make sure that the debtor, creditor, collection agency, and every other entity that may be involved in the bankruptcy process follow the rules dictated by federal law.
Licensed Insolvency Trustees are not debt consultants. This is an important distinction to make because debt consultants are not licensed by the OSB to help with your financial problems.
Debt consultants charge a fee to advise you on how to solve your debt problems, and they ultimately refer you to an LIT. When the LIT takes over your case, they will handle the paperwork and help you overcome debt.
All the Licensed Insolvency Trustees in Canada are listed on the Superintendent of Bankruptcy website, so it’s easy to find out if you’re talking to an LIT or a debt consultant.
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Why Do I Need A Bankruptcy Trustee
Bankruptcy and consumers proposals are complicated legal processes governed by federal law. That’s why you can only file for bankruptcy with the help of a Licensed Insolvency Trustee.
Bankruptcy trustees complete rigorous education programs that run from 2 – 5 years or more and include practical experience in debt management. They pass multiple exams to obtain their licenses and be able to administer bankruptcies.
Thanks to their training and expertise, LITs are qualified to advise you on how to overcome your financial difficulties.
It’s important to note that LITs will not try to convince you to file for bankruptcy. LITs must adhere to federal standards of practice, one of the most important ones being the Code of Ethics for Trustees.
In fact, most people who consult a licensed trustee discover that they don’t need to file for bankruptcy because the trustee can help solve their debts with other solutions.
An LIT will also deal directly with your creditors on your behalf. The LIT will file the necessary papers to start your consumer proposal or bankruptcy process, stopping your unsecured creditors from initiating collection actions or legal proceedings against you.