Who are the LIT’s or Licensed Insolvency Trustees
A Licensed Insolvency Trustee is a trained professional who oversees the filing Consumer Proposal and Bankruptcy in Canada. These Trustees are regulated by the Office of the Superintendent of Bankruptcy Canada, which is a branch of the federal government.
Both bankruptcy and a consumer proposal are legal actions and must therefore be filed by a Licensed Insolvency Trustee. They are not technically employed by the federal government but they have a duty to adhere to the laws and regulations outlined in the Bankruptcy and Insolvency Act. They provide a wide scope of debt management solutions, working one on one with Canadians who are in need of debt relief by assessing their financial situations and helping them make informed decisions.
What is the role of a Licensed Insolvency Trustee:
1. Consultation. This is the very first meeting you will have with your Licensed Insolvency Trustee. The consultations are absolutely free. It is during this meeting that your Trustee assesses your financial situation and tries to access the issues you have with debt repayment. They don’t just help with Bankruptcy related issues, they give you all the options (Consumer Proposal or Bankruptcy) in order to let you analyse and select which debt management solution would work for you.
2. Getting your Credentials. A Licensed Insolvency Trustee collect information from you and prepare the required documents that will be filed with the government. This then becomes the official onset of your insolvency proceeding, whether its a consumer proposal or personal bankruptcy.
3. Communication with your Creditors. Your creditors will be notified and the LIT will accept claims from both parties and review them, then administer the insolvency process. For consumer proposals, votes are recorded to determine whether or not the proposal has been accepted by the creditors. The LIT has the authority to sell your assets and use the money they recover from the sale to help you settle your debts. Alternatively, they can also help you make a proposal to the creditors in order to avoid bankruptcy.
4. Follow Up. Your LIT will make sure that you have completed all the essential duties for insolvency. Based on the type of insolvency proceeding you select, they will apply for your completion certificate or discharge in which case you will ultimately be relieved of your debts. In case you will need the protection of independent legal advice, it also the job of the trustee to refer you to an insolvency lawyer.
When dealing with LITs, you are guaranteed of protection in a number of ways. This is primarily because the federal government regulates the trustees, who are subject to a stringent code of ethics. There is also a mechanism that has been put in place to mediate any dispute that may ensue during the procedure. However, your aim should be to avoid bankruptcy, which means you will have to go with a consumer proposal in order to maintain a better relationship with your creditors. Besides, even with bankruptcy declaration you still get to settle your debt, only it allows you a wider span to completely repay it.
It is important to work with the right trustee. You will however need to uphold honesty and open up concerning your financial situation to get the most out of their services and create a fair ground on which you can discuss any and all debt issues you are having. You are very likely to spend a lot of time with your trustee. Hence, you should make it your top priority to choose someone with whom you get along so well and who will work hard for you.