Licensed Insolvency Trustee vs Debt Consultant: What’s the Difference?

insolvency trustee vs debt consultant

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What is the difference between a Bankruptcy Trustee or a Licensed Insolvency Trustee (LIT) and a Debt Consultant?

If you’re struggling with debt, you might be wondering which of these professionals could help you identify the right debt management solutions for your needs.

Read on to find out more about the differences between LITs and debt consultants, how they can help, discover which of these professionals are licensed by the Office of the Superintendent of Bankruptcy (OSB), and more.

What’s the Difference Between Debt Consultants and Licensed Insolvency Trustees?

Bankruptcy Trustees and Licensed Insolvency Trustees are interchangeable terms. There are several differences between Licensed Insolvency Trustees and debt consultants. However, the main difference is that LITs are certified professionals who are licensed by the OSB, whereas debt consultants are unregulated advisors.

What Is an Insolvency Trustee?

Licensed Insolvency Trustees are trained professionals who are licensed by the Office of the Superintendent of Bankruptcy to administer proposals and bankruptcies.

They are certified professionals qualified to provide financial advice and services to individuals and businesses that struggle with debt in Canada.

LITs are strictly regulated by governing bodies, such as the OSB and the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). The regulation ensures that LITs are qualified and that they represent the best interests of their clients, under any circumstances.

LITs have a structured business model and their fees are regulated at a federal level, so they are not legally allowed to overcharge you. There’s also a formal complaint mechanism you can use to complain about a Trustee’s performance.

Last, but not least, LITs are the only professionals authorized to administer insolvency procedures that can help you overcome debt, such as proposals or bankruptcies.

What Is a Debt Consultant?

Debt consultants are not regulated by the OSB. They do not have to meet strict legislative requirements, and they are not required to have any formal training or relevant background in order to provide their services.

Since debt consultants are unregulated, they have very few restrictions as to what they can charge for their services.

Debt consultants cannot help you file consumer proposals or bankruptcies, and they cannot serve as bankruptcy trustees in insolvency cases,

Factors to Consider Between a LIT and a Debt Consultant

Factors to ConsiderLicensed Insolvency TrusteesDebt Consultants
Provides a Free initial consultation?YesUnsure
Can file a consumer proposal?YesNo
Can file a bankruptcy?YesNo
Are Federally licensed?YesNo
Are Federally regulated?YesNo
Are assessed by the government for experience and education?YesNo
Are their Fees regulated?YesNo
Formal complaint mechanism is available?YesUnsure
Provides financial counselling?YesNo

Differences in Approach to Handling Your Debt

Licensed Insolvency Trustees and debt consultants handle your debt differently.

Debt Consultants

Even though debt consultants may handle your debt in many different ways, most of them advise their clients to set money aside in a separate bank account until they can pay off their creditors.

While this approach has its merits, one of its downsides is that it doesn’t offer any protection from collection actions and wage garnishment until you manage to save up the necessary amount.

Licensed Insolvency Trustees

LITs have multiple tools at their disposal. They can help you find a suitable debt management solution, and are ethically obligated to present the best option for your needs.

A LIT will explain the debt management process before you agree to it and will walk you through the process step by step.

Trustees can also file proposals and bankruptcies, which are legal procedures that stop collection actions and wage garnishments. These legal procedures can also help you reduce the amount of money you owe to your creditors.

Consult with Our Licensed Insolvency Trustees

Struggling to overcome debt? Consult with our Licensed Insolvency Trustees and find the right solution for your financial situation.

Our LITs are qualified, certified professionals with insight and experience, who can help you identify the correct debt management solution for your needs. Together, we’ll explore all the debt solutions at your disposal, including credit counseling, debt consolidation, consumer proposals, and bankruptcy.

We offer free, no-obligation consultations.

Contact us today and take the first steps toward debt relief.

Book your free consultation

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