What’s the Difference Between a Bankruptcy Trustee and a Licensed Insolvency Trustee?
Ok, that was a bit of a trick question. The answer is—absolutely nothing. Bankruptcy Trustee, Insolvency Trustee, Trustee in Bankruptcy, Licensed Insolvency Trustee, LIT – they’re all terms that are commonly used to describe a debt professional licensed by the federal Office of the Superintendent of Bankruptcy (OSB).
That being said, the current official term for a licensed debt professional is a Licensed Insolvency Trustee. Late in 2015, the Office of the Superintendent of Bankruptcy announced that they would change the insolvency professional designation throughout Canada. Professionals formerly designated as Insolvency or Bankruptcy Trustees are now known as Licensed Insolvency Trustees – or LIT for short.
Why Change the Name from Bankruptcy Trustee to Licensed Insolvency Trustee?
There were a few main reasons for the change, the first being the need to protect against the misuse of the Bankruptcy Trustee designation by unlicensed providers. The term “Licensed” also more accurately reflects the Trustee’s position and signifies the high level of education and training involved, as well as the strict code of conduct adhered to. Another major factor for the change was to help convey the wide arrange of services that a Trustee can offer. Before the name change, many people looking for debt relief were led to believe that a Bankruptcy Trustee could only provide bankruptcy as an option to their debt problems. Personal bankruptcy is used as an absolute last resort, and other options should always be explored with a debt advisor.
Licensed Insolvency Trustees can provide an array of solutions to individuals who are dealing with debt including, Consumer Proposals, Debt Consolidation and Credit Counselling – and this fact was emphasized with the new designation of Licensed Insolvency Trustee.
What is a Licensed Insolvency Trustee?
Whether you know them as Bankruptcy Trustees or a Licensed Insolvency Trustees (LITs), it’s vital that you understand what they are and how they can help you.
Licensed Trustees are the only professionals who are legally authorized to help Canadians eliminate their debts by using legal processes such as Consumer Proposals and Personal Bankruptcy. LITs help people find suitable debt relief options for their financial problems and help resolve financial issues that may arise between a debtors and their creditors.
To obtain their license from the Superintendent of Bankruptcy, an individual must successfully complete a specialized accreditation program, meet government qualifications, and meet a minimum amount of relevant work experience within the industry. Licensed Insolvency Trustees also hold a designation with the Canadian Association of Insolvency & Restructuring Professionals (CAIRP), which ensures the adhere to a strict code of ethics and rules of professional conduct.
What is the Difference Between a Licensed Insolvency Trustee and a Debt Consultant or Credit Counsellor?
If you’re looking for debt help, you’ll come across debt service providers, such as debt consultants or traditional credit counsellors, that are offering you something that sounds very similar to a Consumer Proposal—but they are not the same thing at all. They are missing most of the benefits and protection that a Consumer Proposal and working with a LIT can offer you.
There are some significant differences between a consumer proposal which is filed by a Licensed Insolvency Trustee, and a debt management plan, which is what a credit counsellor or debt consultant can offer you. We can’t stress this point enough—a consumer proposal is a legally binding agreement that provides you protections from your creditors, while a debt management plan is completely voluntary. Your creditors don’t have participate and there is no protection against any legal action that has already been taken or that could be brought against you in the future.
If you’re struggling with your debt, it’s important to understand that only a Licensed Insolvency Trustee can administer a Consumer Proposal or Bankruptcy. Reach out to one of our Insolvency Trustees now and they will walk you through all the options available to reduce or eliminate your debt and answer any questions that you have about the process.