January 12, 2022
Licensed Insolvency Trustees can help anyone with financial issues become debt-free. Two of our Licensed Insolvency Trustees explain how they can help you out of debt.
Debt can feel overwhelming, but you don’t have to face it alone. Licensed Insolvency Trustees are the only professionals in Canada legally authorized to file a consumer proposal or bankruptcy on your behalf. But their role goes beyond paperwork—they offer judgment-free guidance, support, and concrete solutions to help you regain financial control.
To better understand how Licenced Insolvency Trustees help Canadians struggling with debt, we spoke with two BDO Trustees, Michelle Statz and Ilan Kibel. They shared their insights on what makes their role unique, how they provide judgment-free support, and what debt relief options are available.
Licensed Insolvency Trustees (LIT) are regulated by the federal government and must adhere to strict ethical and professional standards. LITs are obligated to follow the rules and guidelines set out by the Office of the Superintendent of Bankruptcy (OSB). Their primary role is to help individuals and businesses resolve their debt issues in a manner that is fair and transparent for all parties involved.
The first consultation with a Trustee is free so you can get the advice you need without any pressure, says Ilan Kibel.
“We're the only people that are legally licensed, and as I say, there's a free consultation. There are no commitments you need to make. Educate yourself through the people that know what the process is about. A lot of people go online and try to find the information. The most reliable approach is to have a conversation with someone who understands every aspect of the topic.”
Licensed Insolvency Trustees act as a neutral third party, balancing the interests of both debtors and creditors to find a fair settlement. This means that while they are helping you navigate your financial difficulties, they also ensure your creditors receive a fair agreement. This impartial approach helps maintain the integrity of the insolvency process and protects all stakeholders.
LITs do not work for your creditors. Their goal is to find a way for you to repay your debt that your creditor will accept.
Confidentiality is vital in any issue involving debt. LITs are bound by strict confidentiality agreements, ensuring that your personal financial information remains private. This can give you peace of mind, knowing that your sensitive information is handled with the utmost care and discretion.
LITs provide a judgment-free environment for individuals facing financial difficulties. When you speak with an LIT, you can expect a compassionate and non-judgmental approach to your unique situation. They understand that debt issues can arise from a variety of circumstances, many of which are beyond your control, such as job loss, divorce, or economic downturns. Their role is to help you find a path forward, not to pass judgment on how you got there.
“Just taking that step to come in and see us is a big deal. Once they meet with us, they will not feel judged. We try to be as empathetic as we can be. We know talking about debt is difficult and stressful,” says BDO LIT Michelle Statz.
Meeting with an LIT is a safe space where you can openly discuss your financial challenges without fear of criticism. They are trained to listen and understand your concerns. Their primary goal is to assist you in finding the most effective debt relief solution that suits your needs and circumstances.
A Licensed Insolvency Trustee can use many solutions to help someone become debt-free. Two of these cannot be done do on your own; only a Licensed Insolvency Trustee can file them on your behalf:
A consumer proposal allows you to keep all your assets, including your car and home, and reduces the amount of money you have to pay back on unsecured debt. Unsecured debt includes credit card debt, personal loans, and payday loans. With a consumer proposal, your unsecured debt can be reduced by up to 80%.
If the majority of your creditors agree to the terms of the consumer proposal, then they are all bound by the proposal, even those who voted against it.
A consumer proposal can last up to five years. During this time, you will have to make monthly payments until the agreed-upon amount is paid back.
Filing a consumer proposal also protects you from your creditors. Once the proposal is filed, creditors are legally required to stop collection efforts, including wage garnishments and calls from collection agencies.
Consumer proposals are tailored to meet your needs. Payments are based on your financial situation; they also have a less severe impact than bankruptcy on your credit rating, allowing you to begin rebuilding your credit sooner.
Declaring bankruptcy is a significant decision, but it can offer a fresh start for individuals overwhelmed by debt.
The main advantage of bankruptcy is that it removes most unsecured debts. This allows you to reset your financial situation and focus on rebuilding your credit.
Upon filing for bankruptcy, you might need to surrender some of your assets to repay creditors, your credit rating will also automatically drop to R9, the lowest possible rating. You can recover your credit though and by completing the bankruptcy process you can be more attractive to creditors as you will then be debt-free.
Bankruptcy also takes a much shorter time to complete than a consumer proposal. A first bankruptcy will last between nine to 21 months.
Like a consumer proposal, once you file for bankruptcy, an automatic stay of proceedings is enacted, halting all collection activities, including wage garnishments, lawsuits, and calls from collection agencies. This legal protection gives you the space and time needed to reorganize your finances without the constant stress of creditor harassment.
While LITs are the only licensed debt professionals in Canada, that doesn’t mean they only do bankruptcy and consumer proposals. Their job is to show you all your options, as Ilan points out.
“Just because we are called Licensed Insolvency Trustees doesn't mean we only offer a consumer proposal or a bankruptcy. We look at all the options available, whether there are options to consolidate debts or create a budget and pay down your debt.”
Only a Licensed Insolvency Trustee has the expertise and legal authority to file a consumer or bankruptcy proposal on your behalf. An LIT can assess your financial situation, help you determine if either of these is the right option for you, and guide you through the entire process, ensuring your interests are protected and providing you with the best chance to achieve financial stability.
January 12, 2022
Licensed Insolvency Trustees can help anyone with financial issues become debt-free. Two of our Licensed Insolvency Trustees explain how they can help you out of debt.
