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Using a Trustee for Bankruptcy & Debt Relief

Finding a Trustee for Bankruptcy 

If you’re having difficulty staying on top of your debt payments, you may be searching for a trustee for bankruptcy. Debt can be very tough to manage and, if you have more debt that you can handle, it’s a good idea to look to a professional for assistance.  

Debt can feel overwhelming and the fact that it often seems like there is no way out can make dealing with it feel even more stressful. When bills keep piling up and creditors and collection agents start calling, it might feel like there’s no way to escape. However, the reality is that there are many debt relief options available. While bankruptcy is possibly the most well-known debt relief option, it isn’t the only choice out there. Each person’s financial situation is unique and different options work better depending on the situation.  

When you meet with a trustee for bankruptcy, they will help you understand the available options. Trustees don’t just talk about bankruptcy. They will give you details on all other options that may be right for you. This is a big benefit to meeting with a trustee and a reason to consider a Licensed Insolvency Trustee over other financial professionals. Trustees are bound to strict code of ethics. One aspect of this code is that they are required to provide information on all debt relief options, not just the ones they administer. Some other financial professionals may just give details on the options that are most familiar to them.  

When you meet with a Licensed Insolvency Trustee, they will give you information on every available debt relief option and then it is up to you to determine how to proceed. 

There are many ways to find a trustee in bankruptcy, but one important factor is to work with someone who you feel comfortable with and who you can trust. This aspect can often be overlooked. While all trustees are licensed and have received training, they obviously all have their own personalities and styles. This is an important factor, since you will be working with the trustee closely. You’ll want someone who you can get along with and who you feel comfortable talking to.  

How a Trustee for Bankruptcy Works 

If you’re having trouble with debt, a Licensed Insolvency Trustee can help you understand your options. The first step is to meet for a consultation. Most trustees offer the initial consultation at no charge. During this meeting, the trustee will review your financial situation and let you know what debt relief options are available. It is then your decision as to how you will proceed. A trustee will never attempt to convince you to choose one option over another nor will they try to influence your decision in any way.  

A trustee will, however, answer any questions that you have about the processes to make sure you have all the information you need. 

If you decide that you wish to proceed with a bankruptcy or a consumer proposal, the trustee will administer these legal processes. Only licensed trustees can administer bankruptcies and consumer proposals in Canada.  

Once either of these processes is filed, the trustee becomes responsible for all communication between a person and their creditors. Creditors cannot contact the debtor directly and they cannot take legal action against them to collect on the debts. Any actions that have already started must stop.

If you file a consumer proposal, you will make monthly payments to the trustee who will distribute them to your creditors. The trustee’s fees are taken from the proposal payments and these rates are set by the federal government. 

If you file a bankruptcy, you may also have to make monthly payments to your creditors (depending on your income). In these cases, the trustee will receive these payments and distribute them as well. A part of these monthly payments will be used to compensate the trustee for their time, filing fees, etc. Every trustee for bankruptcy has their fees set by the federal government. 

With bankruptcy and consumer proposal, you will also be required to take financial counselling sessions. These are taught by the trustee. The goal of these sessions is to teach financial management, budgeting, and other money skills so that you can avoid debt problems in the future.  

It is important that you keep the trustee up to date with your contact information throughout the process in case they need to reach you. This means if you move, change your phone number, or change jobs, you will need to let the trustee know.  

Do You Need a Trustee for Bankruptcy? 

In Canada, bankruptcies must be filed by a trustee. While, in other countries, it may be possible to file for bankruptcy with a lawyer or even file on your own, this isn’t the case in Canada. A Licensed Insolvency Trustee is the only person who can administer the bankruptcy process. 

To become a trustee for bankruptcy and insolvency situations, a person must complete specific training.  

A person must hold a Canadian university degree or equivalent to become a trustee, or they must have at least five years of relevant experience in the insolvency field. Members of recognized professional organizations may also be considered. Anyone who wishes to be licensed must complete the Chartered Insolvency and Restructuring Professional Qualification Program as well as the Insolvency Counsellor’s Qualification Course to receive their license.  

Trustees are regularly reviewed and audited to make sure they are following the standards of their profession, adhering to the Code of Ethics for Trustees, and following the Bankruptcy and Insolvency Act. 

The difference between speaking with a trustee for bankruptcy or other debt issues and speaking with any other debt relief professional is the standardized training required. Trustees are licensed by the Office of the Superintendent of Bankruptcy, so you know that anyone who is able to call themselves a Licensed Insolvency Trustee is appropriately qualified.  

Working with a trustee is an excellent way to resolve debt issues. Not only are Licensed Insolvency Trustees the only professionals that are able to administer insolvency processes (such as bankruptcies and consumer proposals), but the trustee code of ethics states that they are required to give details of all debt relief options.  

When you meet with many other debt relief professionals, you are likely only provided details on the options of which the person is most familiar. In many cases, it isn’t that the person wants to limit the information you’re given, it’s just that many other debt professionals may only have experience with certain processes, so they only suggest those that they know. When you work with a trustee for bankruptcy or debt relief in general, the trustee will ensure that you have as much information on all different options as possible.  

Other Debt Relief Options 

While those who are having debt problems may look to find a trustee for bankruptcy, it’s important to keep in mind that bankruptcy isn’t the only option for those who are dealing with debt nor is it the only debt relief option that a Licensed Insolvency Trustee can offer.  

For example, a consumer proposal could be a better option if you are struggling with debt but able to repay some of what you owe. Whether or not this is the right choice (or if another choice is more appropriate) will depend on the specifics of your particular situation.  

With a consumer proposal, the trustee reviews your situation and determines what a fair offer to your creditors will be. In the majority of cases, this amount will be a portion of what is owed. The trustee then sends this proposal to your creditors. Each creditor is then able to vote on whether they wish to accept the offer. If the creditors that are owed the majority of the debt choose to accept, then the proposal becomes binding and all creditors are bound by its terms. For instance, if you owe $60,000 in debt, and the creditor(s) that are owed at least $30,000 vote in favour of the proposal, it becomes binding for all of your unsecured creditors. 

In essence, a consumer proposal is a way for a person who is dealing with debt problems to pay only a portion of what they owe and have the remaining debt forgiven. 

Of course, a consumer proposal isn’t the right choice for everyone just like a bankruptcy isn’t the right option for everyone. Speaking with a trustee for bankruptcy or any debt relief option is important as it allows you to fully understand what choices you may have. For some people, debt consolidation or credit counselling may be able to solve their debt issues. For others, a consumer proposal can be a good choice. While bankruptcy is often considered to be the last option and one that is only talked about after all others have been dismissed, in certain instances, bankruptcy makes a lot of sense. Rather than continuing to struggle with debt, working with a trustee for bankruptcy can be very helpful.

The important fact to keep in mind is that every financial situation is unique and that the debt relief option that is right for one person won’t necessarily be right for another. There’s no “one size fits all” solution that is perfect for everyone.  

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