When you have money problems you can’t solve on your own, deciding to seek professional help makes good sense. Licensed Insolvency Trustees (LIT) have many tools at their disposal and can help you work through your debt crisis. If you need a complete review of what options you have to deal with your debt, a Trustee is the best place to start.
Licensed Insolvency Trustees
The law requires individuals who wish to file a Consumer Proposal or an Assignment in Bankruptcy, do so through a Licensed Insolvency Trustee. A Trustee will review your situation with you, and explain all of the options available to you for handling your debt issues. If you decide to use a legislative solution, (a Consumer Proposal or Bankruptcy) the whole process will be administered by your LIT.
Although the laws regarding Consumer Proposals and Bankruptcy are defined by federal law, each province has legislation that affects what creditors can do to collect, and how your assets are dealt with in a Bankruptcy. Because the rules vary so widely, you need to find a Trustee that practices in your region.
Choosing a Licensed Insolvency Trustee
Nearly every Trustee will offer a free initial consultation. Some trustees may limit the time available to that consultation, but a good one will take whatever time is necessary to review your situation and explain your options.
At that initial consultation, the Trustee will need to do a full review of your situation — your debts, your assets, your employment situation, and your family situation. From that, the Trustee can identify what options you may have to deal with your debt. Many times there are simple options available that will solve your problem. Some people are what we call “judgment proof”. In those situations, all that is needed is advice on how to deal effectively with creditors. For others, there are solutions such as better budgeting, seeking a consolidation loan, or in the case of small businesses, a reorganization of the business. A good Trustee will explain these options to you if there is a chance that they could work for you.
Trustees administer Consumer Proposals and Bankruptcy. If your situation is such that one of these is your best option, the Trustee will explain both options to you, and the relative advantages and disadvantages of each. Very often, the reason for choosing one or the other of these options comes down to a question of what you want to accomplish, and where you want to be in a year, or 5 years.
Both options, Consumer Proposal and Bankruptcy, have distinct differences and advantages, depending on the situation. A Proposal will cost you more and usually last longer than a Bankruptcy (up to 5 years) but may protect any assets you have that are not exempt in your Province. A Bankruptcy is generally cheaper and could last as little as 9 months or, depending on your situation, as much as 36 months, but some assets that are not considered essential may be liquidated for the benefit of your creditors. A great deal depends on who your creditors are, and what your assets, income, and family situation is. Only with a thorough review of the entire situation, can the Trustee give you a clear picture of how each would work in your situation.
Beware of a Trustee who does not explain both of these options to you. The reality is that, for the Trustee, Consumer Proposals are cheaper and easier than a Bankruptcy to administer. You want a Trustee who is putting your interests first, not their own.
In most cases, it is helpful to find a Trustee that is close to your place of residence. As well as the initial consultation and subsequent signing of documents, you will also be required to meet with your Trustee for two financial counseling sessions. A Trustee with an office close to home makes it convenient to visit the office when the need arises. However, if you live in Northern Manitoba (anywhere North of the 51st parallel), you are not required to meet in person with the Trustee, either for the initial consultation or the financial counselling sessions. While an initial in-person meeting is preferable, it is possible to do the entire process over the telephone.
Locating a Licensed Insolvency Trustee
Like most businesses, the best way to find a good Trustee is through the recommendation of a family member or friend who has had a good experience with their Trustee. If you don’t know anyone who can refer someone, the government maintains a registry that you can search online at Industry Canada’s website. The Trustee Registry provides the names of trustees, their addresses, and other necessary contact information. You can search the registry using the name of the trustee, whether they practice individually or with a firm, or by province or territory.
Many Trustees are part of larger accounting firms. Some consumers may see this as an advantage, particularly if they own a good-sized business. Other consumers may feel that there is an advantage to going to a company that specializes solely in the Insolvency field — because of the in-depth expertise they have with debt, and because of a lack of competing interests within the company.
Finding a Trustee When You Can’t Afford One
The Bankruptcy Assistance Program (BAP) was set up to help Canadians who need the services of a Trustee but can’t afford one. If you need help, you should contact the OSB, and they will provide you with a list of Trustees who participate in the BAP program. You can then contact a Trustee and set up a consultation.
The Trustees at LCTaylor
The Trustees at LCTaylor have been in practice for over thirty years and have helped thousands of Canadians get their overwhelming debt under control. LCTaylor is an insolvency-only firm, with an entire staff dedicated to solving people’s debt problems. We service all of Manitoba and North-Western Ontario virtually and have an office in Winnipeg. Initial consultations are free, and you will have all the time you need to ask questions and review all of your options. If you live outside of Manitoba or North-Western Ontario, you can use the OSB’s Trustee register to find a Trustee that you will meet your needs. The most important action you can take is getting started. The sooner you address your debt, the more debt relief options your Trustee will be able to provide.
Leigh C. Taylor, LIT
