Legal Guide

How Can a Licensed Bankruptcy Trustee Help with Your Debt?

Getting in debt is a common financial problem that people find themselves in, and going through it can be challenging. In return for their debts being forgiven, people proceed with declaring bankruptcy. It is the most suitable solution when the debtor’s operations aren’t viable anymore or can’t be restructured to provide greater value.

When overburdening debts or loans begin to weight you down, you start thinking of ways to deal with the situation in the most responsible and straightforward way. Referring to a Licensed Bankruptcy Trustee (also known as Licensed Insolvency Trustee) is probably the most obvious first step towards finding the right solution.

What is a Licensed Bankruptcy Trustee?

Whether you call the Licensed Insolvency Trustees or Bankruptcy Trustees, it’s important that you understand who they are, what they do, and how they can help you.

Licensed Insolvency trustees are individuals licensed to administer bankruptcies and proposals. Licenses are distributed by the Office of the Superintendent of Bankruptcy, following the Bankruptcy and Insolvency Act.

These professionals are the only ones authorized to help Canadian citizens eliminate their debts. Licensed Insolvency Trustees (LITs) help people find the right debt relief option for their financial issues. They also help them resolve any problems that may arise between the debtor and creditor(s).

In order to become a LIT and earn a license, every individual must meet government qualifications, complete a specialized accreditation program, and meet a minimum amount of work experience in the industry. They also hold a designation with the CAIRP (Canadian Association of Insolvency and Restructuring Professionals), which ensures adherence to a strict code of rules and ethics of professional conduct.

So, what is the process and where do LITs come in?

Most of insolvency laws have been designed in a way that allows for individuals to file for personal bankruptcy, rather than following Court mandates and elaborate legal procedures. That’s where the trustee comes in – a top Toronto bankruptcy trustee can help you file any type of bankruptcy claim (without even involving the court) and is educated and experienced in the field. You can consult with them as you need, and they will help you understand the manner of debt-relief options.

Why the Change of Name?

The first reason for the change of name from a Bankruptcy Trustee to Licensed Insolvency Trustee is the need for protection against the misuse of the Bankruptcy Trustee designation by providers without a license. There is a high level of training and education required to become a LIT, and the term “licensed” is there to reflect the LIT’s position more accurately.

Another important reason behind the name change was to help communicate the wide array of services that a LIT can provide. Before, many of those looking for the best debt relief option were led to believe that the bankruptcy option was the only debt-relief option that a Bankruptcy Trustee can provide. There are many options one can explore with a debt advisor, such as credit counselling, debt consolidation, and consumer proposals (with personal bankruptcy being the last resort).

How Can a Licensed Insolvency Trustee Help?

An experienced LIT can walk you through other viable debt solutions or help you through the bankruptcy process efficiently and thoroughly. They will help you understand the entire bankruptcy process, oversee your duties, and administer documentation. Once you submit a consumer proposal or file a bankruptcy, they’ll communicate with your creditors on your behalf.

For people struggling with financial issues, LITs are often vital. They can review and study your finances with you, including debts and income, and help reach the best solution for your unique circumstance. Most often, the two best options are filing for:

  • Consumer proposal
  • Bankruptcy

If you choose to file either one of these, your Licensed Insolvency Trustee will help you gather and prepare all the important documents for your process and file it on behalf of you. They will also keep track of the entire process to make sure everybody complies with the necessary protocols.

LITs work includes work such as:

  • administrative work
  • administering creditor claims
  • enforcing regulations
  • distributions to creditors
  • asset realizations
  • requesting a discharge when you become eligible (usually after 9 or 21 months)
  • taking care of all applications that accompany the bankruptcy process

Ultimately, creditors also benefit because the LIT help their debtor figure out the way of paying of their debt. They make sure that they have all, most, or at least some of the debt covered.

Do you need LIT services? You do if you’re seeing some of the following signs regarding your financial situation:

  • Missing utility bill payments
  • Missing payments or paying enough to cover the minimum
  • Borrowing money to be able to make it until the next payday
  • Getting pressured by your creditors to make the payments
  • Continually going through your credit card spending limit

Why Work with a LIT?

Since LITs are regulated by the Canadian government, you’ll be paying a lot less then if you went with another debt relief agency. LITs always maintain the highest standards of ethics to help mediate any problems you may have and guide you through the debt-relief process.

Whether you want to understand your duties if you decide to file for bankruptcy or draft a consumer proposal, your LIT is there for answering any questions and solving dilemmas regarding your debt and rights as a debtor.

Since every debt case is a story of its own and must be tailored to individual needs, it is helpful to have such a professional for financial services and advice of the top quality. And you can have a peace of mind when knowing that no collections or legal action from unsecured creditors will proceed.

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