What Is A Licensed Insolvency Trustee?
And How Are They Different Than A Debt Consultant?
There are many debt advising businesses out there that offer to help consumers with their debt. A majority of these are unregulated ‘debt consultants’ working without licences. Most will charge a fee to refer debtors to a Licensed Insolvency Trustee. Bankruptcy and consumer proposals may only be administered by a Licensed Insolvency Trustee
Bankruptcy Trustees are now called Licensed Insolvency Trustees.
The trustee designation was changed from Bankruptcy Trustee to Licensed Insolvency Trustee by The Office of the Superintendent of Bankruptcy of Canada in 2016. This is to help consumers identify trustees licensed to perform insolvency procedures. This includes personal and corporate bankruptcies, and consumer proposals. Only persons federally licensed by the Canadian government are allowed to use this term. If you speak to someone who does not tell you they are a Licensed Insolvency Trustee, even if they advertise bankruptcy and proposals, they are not licensed and cannot provide the same services.
People are often afraid of coming in to talk to a Trustee. This fear and misinformation is promoted by unlicensed debt advisors. At C.E.Craig & Associates, the first consultation is always FREE, and there are no obligations. We are here to support clients and advise you of all the best alternatives.
Who regulates Licensed Insolvency Trustees?
The Office of the Superintendent of Bankruptcy is responsible for licensing and monitoring Licensed Insolvency Trustees. They also set the policies and procedures for the industry. A trustee cannot charge fees other than the amount outlined in the Bankruptcy and Insolvency Act.
Trustees can get further certification such as CAIRP (Canadian Association of Insolvency and Restructuring Processionals). Members specialize in traditional bankruptcies and proposals, as well as debt restructuring.
Who does a trustee work for?
Every bankruptcy and consumer proposal is assigned to a specific individual trustee. A trustee must care for all the stakeholders involved in the insolvency process, including the creditors, but this also includes the debtor and the community. The trustee acts as a middleman and ensures both the debtor and the creditor play fair. Errors made by trustees affect their personal license and reputation.
Do you hire a trustee?
You do not hire a trustee, but you are free to choose which trustee you want to work with. All reputable trustees have free initial consultations. Do not pay a fee to be referred to a trustee, call them directly. Find a trustee in your area.
What does a trustee do?
A trustee meets with individuals to perform a debt assessment, and discuss various options to resolve their debt. Most people don’t need to file for a bankruptcy, and just need guidance.
Non-licensed debt counsellors often pressure people into solutions that generate additional, and unnecessary fees, as opposed to the best solution.
How is a trustee paid?
Trustees are technically paid by the creditors involved in the bankruptcy or proposal. The debtor makes payments to the trustee based on their income, and the money is kept in an account. The funds held are distributed to the government first, then trustees, and then creditors. Trustees are not paid by the government.
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