What is a Licensed Insolvency Trustee?Oct 28, 2020
Have you ever heard of a Licensed Insolvency Trustee (LIT)? Don’t worry, most people haven’t. According to a previous poll, only 21 per cent of Canadians were familiar with what an LIT does. But when they learned about what they do, 51 per cent of Canadians with debt problems said they would be likely to consult an LIT for advice.
What is a Licensed Insolvency Trustee?
A Licensed Insolvency Trustee is licensed by the Superintendent of Bankruptcy to help people who are having difficulty paying their debts. They can give you practical advice on all things debt related, like budgeting and debt consolidation.
Think of an LIT as a debt solutions expert. Their job is to help people fix their debt problems. No need to feel embarrassed, they’ve seen everything. If you are worried about your debt, an LIT can give you sound advice on a wide range of debt relief options and point you in the right direction.
What can a Licensed Insolvency Trustee do for you?
Many people have never heard of consumer proposals before, but they are actually a lot more common than bankruptcies. A consumer proposal has the advantage of letting you keep all your assets (like your house and your car). An LIT may suggest this option if you are unable to pay some of your debt.
An LIT can also offer bankruptcy services if you are unable to pay back everything you owe. Chances are they aren’t as frightening as you might think. A bankruptcy has the advantage of wiping your debt slate clean so you can start fresh. You don’t have to lose your house or your car either. In fact, by helping you make up-to-date mortgage and car loan payments, a bankruptcy can actually help you keep both.
What are the benefits of working with a Licensed Insolvency Trustee?
- An LIT will deal directly with your creditors so you don’t have to.
- Once an LIT initiates a consumer proposal or bankruptcy proceedings, collection calls and other actions against you stop (like lawsuits, wage garnishments). Interest also stops accumulating on your debts.
- Next, the LIT will negotiate an agreement with your creditors that allow you to make monthly payments through one person, your LIT, over a fixed amount of time (no more than five years).
- If you decide to file for bankruptcy, an LIT will handle the sale of some of your assets and use the money to repay your creditors. You’ll also make monthly payments to your LIT during this process which can be completed in as few as nine months.
- LITs are the most highly trained and educated debt professionals in Canada. In working with one, you will receive valuable counselling on your finances. As part of the consumer proposal and bankruptcy process, you will attend two credit counselling sessions where your LIT will provide you with the necessary educational tools to avoid debt problems in the future.
What sets Licensed Insolvency Trustees apart?
It’s important not to confuse an LIT with a non-profit credit counsellor, a debt consultant or a “debt coach,” there are major differences. 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. They 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.
LIT’s fees, on the other hand, are regulated by the government. And you can be assured that you are dealing with a licensed professional.
When should you contact a Licensed Insolvency Trustee?
When debt gets scary, it’s very easy to bury your head in the sand. Collection emails, letters, phone calls, and service interruptions are meant to intimidate and stress you out. They can also lead to feelings of guilt and embarrassment. No one wants to discuss their credit card bills with friends and family. Asking for help can be hard. An LIT makes it easier. They have dealt with all sorts of debt relief cases. They will not judge you or your debt load. Rather, they will work with you, by negotiating with your creditors and coming up with an arrangement that you can actually afford.
Finally, it’s important to remember that all LITs offer a free, confidential consultation. There is no obligation, no risk. This is the first step in finding the right kind of help.
If you are having trouble paying your debts, get in touch with a Licensed Insolvency Trustee as soon as possible. An LIT will take the time to explain how each debt solution applies to your own financial situation.