What You Need to Know About Working with a Bankruptcy Trustee
When facing financial difficulties, deciding to file for bankruptcy is a major step. If you’re contemplating this option, it’s crucial to work with a bankruptcy trustee, also known as a Licensed Insolvency Trustee (LIT) in Canada. Trustees play a key role in guiding individuals through the bankruptcy process.
Who Is a Trustee in Bankruptcy?
A Trustee in Bankruptcy is a federally licensed professional authorized to administer bankruptcies and consumer proposals in British Columbia. They are regulated by the Office of the Superintendent of Bankruptcy (OSB) and must adhere to strict ethical and professional standards. Choosing a licensed trustee ensures that you are working with someone who is knowledgeable, impartial, and legally qualified to help you navigate insolvency.
What Is the Role of a Bankruptcy Trustee?
The Bankruptcy Trustee is responsible for overseeing the bankruptcy process and ensuring compliance with Canadian bankruptcy laws. Their duties include:
- Assessing Your Financial Situation – Before filing, they assess your debts, income, and assets to identify the best path to debt relief—whether that’s bankruptcy, a consumer proposal, or another solution.
- Filing Legal Documents – The trustee prepares and submits all required paperwork to your creditors and the Superintendent of Bankruptcy.
- Communicating with Creditors – Once your bankruptcy is filed, creditors must go through the trustee rather than contacting you directly.
- Managing Your Assets – In some cases, the trustee may need to sell non-exempt assets to help repay creditors.
- Ensuring Compliance – They help ensure you fulfill all obligations, including making required payments, submitting income and expense reports, and attending two financial counselling sessions.
Do Bankruptcy Trustees Check Bank Accounts?
Yes, bankruptcy trustees do review bank accounts. As part of the bankruptcy process, you must disclose all your financial information, including bank statements. Trustees review this information to ensure accuracy, identify any irregular transactions, and determine whether there are assets that should be included in the bankruptcy estate.
How Does a Bankruptcy Trustee Get Paid?
In bankruptcies in Canada, trustees are compensated based on a government-regulated fee structure. Their fees are paid from the funds collected during the bankruptcy process, which may include:
- Monthly payments made by the client
- Funds from the sale of non-exempt assets
- A portion of recovered funds if creditors receive distributions
The Importance of Trust and Rapport with Your Bankruptcy Trustee
Since filing for bankruptcy is a significant financial decision, it’s important to work with a bankruptcy trustee you trust. A good trustee will:
- Provide clear and straightforward advice
- Maintain a professional yet approachable manner
- Offer guidance and support every step of the way
- Discuss your goals and help you rebuild your financial future
A strong rapport with your trustee can make the process smoother and less stressful. Filing for bankruptcy is a big step, and having the right professional by your side can make all the difference.
Choosing the Right Bankruptcy Trustee
When selecting a trustee, look for someone who is licensed, experienced, and has positive client feedback. Avoid unlicensed debt consultants who may charge unnecessary fees or provide misleading information. Only a Licensed Insolvency Trustee can legally administer bankruptcies and consumer proposals in BC, Canada.
If you’re struggling with debt, reaching out to a bankruptcy trustee is a crucial first step. They can help you explore all your options, including alternatives to bankruptcy. Since consultations with a Licensed Insolvency Trustee are free, it’s worth taking the time to discuss your financial situation and make an informed decision.
If you have any questions about the process or want to learn more about bankruptcies in Canada, contact a Licensed Insolvency Trustee today for a free consultation.
