The Role of a Trustee in Consumer Proposal or Bankruptcy

In Canada, a Licensed Insolvency Trustee (also known as a LIT or Trustee in Bankruptcy) is a person licensed by the Office of the Superintendent of Bankruptcy to administer bankruptcy proceedings and consumer proposals.

LIT’s carry a lot of responsibility when working with you and your creditors – they have to create solutions that work for all parties involved, including the Federal Government.

Below we’ve outlined some of their key responsibilities, and while the list is not all inclusive it will give you a good idea about what a Licensed Insolvency Trustee does when helping you get a fresh start.

Some of the Key Responsibilities

Investigates the Affairs of the Debtor

The first responsibility of the Licensed Insolvency Trustee is to meet with you to assess your debt, income, and financial situation in general to advise you on all your available alternatives.

Ensures your rights are not abused

After the initial review, if you decide to work with a LIT to file bankruptcy or a consumer proposal the LIT will begin investigating the creditor’s claims about what you owe. This is to make sure they are valid and you’re not being taking advantage of.

Administers Consumer Proposals and Bankruptcies

A Licensed Insolvency Trustee is also responsible to prepare the official documentation and file it with the Office of the Superintendent of Bankruptcy (the government office that oversees bankruptcies and proposals in Canada). They also notify all your creditors that you have filed for bankruptcy or a consumer proposal.

During this stage the LIT communicates on your behalf and negotiates fair payment terms for you and your creditors.

The LIT will also protect you from collection agencies and contact them directly.

Protects the Rights of Creditors

In some cases if you have assets that are not exempt from seizure by provincial and federal laws, the LIT will be in charge of distributing the proceeds from the sale of the assets to your creditors.

Another duty of the LIT is evaluating your conduct both before and during bankruptcy or the filing of the consumer proposal and ensuring that you complete your required duties – such as ensuring you complete the mandatory credit counselling sessions, make timely payments, etc.

Prepares Your Discharge

The final responsibility is to prepare you for your discharge – the final step before you complete your bankruptcy or consumer proposal.  To ensure you successfully complete your part of the agreement (make on time payments, complete counselling sessions, etc.) the LIT will complete and submit the required paperwork to release you from your unsecured debts and give you a fresh start.

Fees

LIT fees are regulated by the federal government and often cost much less than other debt management consultants or agencies. Bankruptcy fees are based on the size of the file and amount of work involved. Consumer proposal fees are taken out of your payments to creditors – technically costing you nothing.

Get a Free Consultation

If you have been struggling to pay off your debts and looking for options that can provide you with a fresh start give us a call for your Free, No-Obligation Consultation. It’s 100% confidential and risk free. We’ll provide you with more information on the options available to you and what can work best in your particular situation.