A Licensed Insolvency Trustee (LIT), or formerly known as a “bankruptcy trustee” prior to April 2016, is licensed by the Office of the Superintendent of Bankruptcy to help people who are having trouble paying their debts. They give practical advice on all types of debt solutions, like budgeting and debt consolidation.
An LIT offers specific services, too. An LIT is the only professional who can administer consumer proposals and bankruptcies. These government-regulated debt forgiveness programs are designed for people who are unable to pay back all or some of their debts.
An LIT is a debt solutions expert. Their job is to help people fix their debt problems. If you are struggling with your debt, an LIT can offer one-on-one support and counselling on a wide range of debt relief options and help you find a path forward.
LITs are the most qualified debt professionals you can work with. They are also the only federally regulated debt advisors in Canada. Their fees are set by the Office of the Superintendent of Bankruptcy and they operate within the Bankruptcy and Insolvency Act of Canada to protect the rights of both debtors and creditors.
It’s important not to confuse an LIT with a non-profit credit counsellor, a debt consultant or a “debt coach.” While non-profit credit counsellors are accredited professionals who can help you prepare a debt management plan, they cannot negotiate a deal where you pay less than what you owe, like in a consumer proposal. A credit counsellor can’t offer personal bankruptcy services either.
As for debt consultants and debt coaches, they may help you with budgeting and debt management. Some debt consultants offer a valuable service, but they are not all the same. Be aware of the details of any agreement before you sign. Because debt consultants are unlicensed and unregulated, so are their fees. They can charge you whatever they want.
Licensed insolvency trustee | Debt consultant | |
|---|---|---|
| Free first consultation | ? | |
| Can file a consumer proposal | ||
| Can file a bankruptcy | ||
| Federally licensed | ||
| Experience and education assessed by the government | ||
| Regulated fees | ||
| Formal complaint mechanism | ? | |
| Insolvency counselling at a low set rate, delivered to federal standards |
Debt can easily become intimidating. Collection emails, letters, phone calls and utilities interruptions are meant to stress you out. They can also lead to feelings of guilt and embarrassment.
Asking for help can be hard. No one wants to discuss their credit card bills with friends and family. An LIT makes it easier. In fact, BDO LITs help thousands of Canadians resolve their debt every year. An LIT will not judge you or the amount of debt you’re carrying. Rather, they will work with you, by negotiating with your creditors and coming up with an arrangement that you can afford.
Finally, it’s important to remember that all LITs offer a free, confidential consultation. There is no obligation, no risk. This is your first step in finding the right kind of help.
BDO LITs all offer a free initial consultation. This is the chance for you to go over your financial obligations with an LIT and explore your options. But it’s also an opportunity for you to decide who you want to work with on your financial recovery. This is an important decision. You can read about other peoples’ experiences with BDO LITs on our blog. You’re under no obligation to follow through with the first LIT you meet.
Three things you should look out for:
How thorough is the consultation? Is the LIT going over your whole financial situation (debts, assets, household budget, miscellaneous expenses, etc.)? The LIT’s job is to get the most exact understanding of where you stand financially so they can best advise you on your options. It should last around an hour.
How clearly does the LIT explain your options? Do they compare different options to help you understand the best solution for you? And, most importantly, are you able to ask as many questions as you like?
Your LIT should be empathetic and solutions focused. They should listen carefully to your story and help you get through any negative feelings that you have towards your debt. Do they try to understand what’s important to you? Do they help you understand how you can achieve your goals?
If you are able to check these three boxes during your initial consultation, you can feel confident that you are working with the right person on your financial recovery journey.
Are your debts overwhelming your finances? To learn more about the different solutions that are available to you, reach out to a BDO Licensed Insolvency Trustee today.
