Thinking of Filing for Bankruptcy? What Licensed Insolvency Trustees Can Do
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- 1 Thinking of Filing for Bankruptcy? What Licensed Insolvency Trustees Can Do
- 1.1 What Licensed Insolvency Trustees Do in a Bankruptcy
- 1.2 What Are Licensed Insolvency Trustees?
- 1.3 What is Bankruptcy?
- 1.4 The Bankruptcy Process & What Licensed Insolvency Trustees Do
- 1.5 Debt Settlement Resources & Articles
- 1.6 What Is The Canadian Emergency Wage Subsidy CEWS
- 1.7 Will I Lose My Home or Car if I File for Bankruptcy?
- 1.8 Can Bankruptcy or Consumer Proposal Eliminate Tax Debt?
What Licensed Insolvency Trustees Do in a Bankruptcy
If you are having trouble making ends meet and paying your bills as they become due, you may be considering filing for bankruptcy. Bankruptcy is often the last option considered, chosen after all other options have been thought about and rejected, but it can be the right choice for many people.
When you file for bankruptcy, you are given an opportunity to have your unsecured debts eliminated and the chance to start fresh.
If you are considering bankruptcy, it is important to have the facts. Licensed Insolvency Trustees can give you the information you need and administer the process if you decide to proceed.
What Are Licensed Insolvency Trustees?
Licensed Insolvency Trustees (LITs) are professionals who have received specific training and who are licensed by the Office of the Superintendent of Bankruptcy to provide information on debt relief options and administer insolvency processes. Only Licensed Insolvency Trustees can administer the bankruptcy process in Canada. Previously LIT was called Trustees in Bankruptcy, but OSB changed their titles a few years ago.
This means that, if you are struggling with debt, a trustee can review your financial situation and provide you with details on the options that are available to you. It is then your decision as to which option you believe works best for you.
Licensed Insolvency Trustees are bound by a strict code of ethics and are required to provide people with information on all the available options, not just the ones that they administer. This is different from some other financial professionals who may only detail those options they personally handle or the ones with which they are the most familiar.
Most Licensed Insolvency Trustees offer a free consultation, so you can find out all the information you need at no cost. It is always your decision on how to proceed. A trustee will never try to influence your decision or tell you which option you should choose.
What is Bankruptcy?
The basic idea behind the bankruptcy process is that a person who is overwhelmed with debt is given the opportunity to start fresh. When you file for bankruptcy, your unsecured debts are eliminated. Unsecured debts are debts that are not backed by an asset. This includes credit card debt, lines of credit, personal loans, tax debt, and many other debts.
Bankruptcy is a legal process and is governed by the federal Bankruptcy and Insolvency Act.
The Bankruptcy Process & What Licensed Insolvency Trustees Do
As mentioned, the trustee will give you the information you need on the bankruptcy process during the consultation. If you have any questions about how filing for bankruptcy will affect you, you should ask the trustee.
When you file for bankruptcy, you may lose some of your assets. These will be surrendered to the trustee who will then use them to compensate your creditors. However, you do not lose everything you own. That is a common misconception. When you file for bankruptcy, you are able to keep certain assets that are deemed necessary for living a basic lifestyle. These are called “exempt assets” and the type and amount of assets that can be considered exempt varies depending on your province or territory. The trustee will inform you of what will happen to your assets before you file and ensure that you are able to keep those that are exempt.
If you decide that filing for bankruptcy makes sense for you, the trustee will complete the necessary paperwork and inform your creditors.
One important aspect of the bankruptcy process is that you receive legal protection from your creditors once you file. All communication with your creditors will be handled by the trustee. In addition, creditors are not able to take legal action against you to collect the debts owed once you file and any actions that have already started must stop.
Depending on how much you earn and the size of your household, you may be required to make monthly surplus income payments to the trustee. They will distribute these payments to your creditors. The government sets a limit on how much a person who has filed for bankruptcy can earn (depending on their family size) before they must make surplus income payments.
Licensed Insolvency Trustees are also responsible for conducting two financial counselling sessions for those who file for bankruptcy. Completing these sessions is part of the duties of someone who has filed. The goal of these sessions is to give people information on money management, debt, and credit so they do not get into financial problems in the future. Speaking with Licensed Insolvency Trustees can help you solve your debt issues.
Debt Settlement Resources & Articles
What is CEWS in Canada? Retailers in Canada who have seen a drop in revenue due to the pandemic may be eligible for a subsidy to cover part of their loss. See how you can apply
Will I Lose My Home or Car if I File for Bankruptcy?The goal of the bankruptcy process is to provide people who are struggling with debt with an option to eliminate those debts and start fresh. What Occurs to your Home or Car if you Declare...
Two processes that could be eliminate your tax debt are consumer proposal and bankruptcy. Learn about these two debt management options and let LIT select which is the best for you.
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