What is a Licensed Insolvency Trustee and What Do They Do?

If debt is making your life a little (or a lot) harder to manage, you are likely looking for ways to get things back under control. Good for you — taking that first step is huge! You might have come across the term Licensed Insolvency Trustee (LIT) in your search, and if you are not exactly sure what it means or how a LIT could help, you’re in the right place. Let us break it down: Licensed Insolvency Trustees (LITs) are professionals in Canada who are trained and authorized to help people and businesses manage their debt and find the right solution. They are the only professionals legally allowed to file a bankruptcy or consumer proposal for you. So, if you’re looking for real, sustainable debt relief, a LIT is a great person to have in your corner.

Understanding the Role of a Licensed Insolvency Trustee

So, what exactly does a LIT do, and why should you care? LITs are like your financial lifeline when things feel overwhelming. They are regulated by the Office of the Superintendent of Bankruptcy (OSB) — a part of the Canadian federal government that oversees insolvency matters. LITs act as neutral third parties, helping both you and your creditors reach a fair solution that works for everyone. And becoming a Licensed Insolvency Trustee? It is not an easy path. It requires years of education, training, and passing rigorous exams. So when you are working with a LIT, you can be sure they know what they are talking about.

Key Responsibilities of Licensed Insolvency Trustees

A LIT wears a lot of hats when it comes to helping you with your finances. Here is what they do:

1. Assess Your Financial Situation

One of the first things a LIT will do is take a deep dive into your finances. They will look at your income, debts, expenses, and assets to get a full picture of what’s going on. From there, they will help you figure out what debt solution makes the most sense for you.

2. Provide Financial Counselling

It is not just about paying off debt: LITs offer broader financial counselling to help you with budgeting, managing your money better, and setting you up for future success. It is all about making sure you have the tools to not only solve your current financial problems but to avoid them — and debt — in the future.

3. Manage Debt Solutions

LITs are the only professionals in Canada authorized to file legal debt relief options like Consumer Proposals or bankruptcies. If either of these solutions fits your situation, they will guide you through the process step by step, making sure everything is clear and smooth.

Services Offered by Licensed Insolvency Trustees

If your debt has become too much to manage, the last thing you should do is take out a payday loan. With astronomical interest rates, choosing a payday loan is a temporary solution that will only make your situation worse in the long run. That is why, when you reach out to a LIT, you will find they offer a range of services designed to help you get your finances back on track. Here is what they can do for you:

Consumer Proposals

A Consumer Proposal is like a legal offer to your creditors to pay back a portion of your debt over time. It is a fantastic option if you want to avoid bankruptcy but cannot afford to pay back the full amount you owe. LITs are the only people who can file these proposals for you.

Bankruptcy Administration

If your financial situation has reached the point where bankruptcy is the best option, a LIT is there to help. They will walk you through the entire process, from filing the paperwork to managing your assets, so you can get the fresh financial start you need.

Debt Management Plans

If your debt feels overwhelming but you are not ready for a Consumer Proposal or bankruptcy, a debt management plan can help you take control. It is not about consolidating your debts, but about implementing smart strategies to manage and reduce them over time. With this plan, you can combine your debts into one monthly payment, which you pay to them, and they distribute the funds to your creditors. This simplifies the repayment process, making it easier to manage your finances and work toward becoming debt-free.

Plans for Financial Success

Start by creating a realistic budget, tracking your income and expenses to see where you can cut back, save more, and allocate more funds toward debt repayment. Next, prioritize your debts — consider the “debt avalanche” method, where you focus on paying off the highest-interest debt first, then move on to the next. This approach helps reduce the amount of interest you pay over time, making it easier to stay on top of your financial obligations. Stay consistent, and as your payments chip away at your debt, you will find yourself getting closer to financial freedom.

Financial Counselling

Financial counselling is a huge part of what LITs offer. They will work with you to develop better financial habits and ensure you have a solid plan moving forward to avoid similar financial issues in the future.

The Process of Working with a Licensed Insolvency Trustee

If you are wondering how working with a LIT works, here is a simple breakdown of the process:

1. Free Consultation

The first step is to have a free consultation. This is where the LIT will assess your financial situation and start thinking about potential solutions. It is also a chance for you to ask questions and feel out the process.

2. Discuss Your Options

After they have had a chance to review your situation, the LIT will lay out your options. Whether it is a Consumer Proposal, bankruptcy, or another solution, they will explain everything in detail and help you make the best decision for your situation.

3. Putting a Plan in Place

Once you have chosen the right solution, your LIT will get to work putting your plan into action. They will take care of the paperwork, communicate with your creditors, and make sure everything runs smoothly.

4. Ongoing Support

Even after your plan is in place, your LIT will continue to provide support. From counselling to guidance, they are there to help you stay on track and get your financial life back in order.

Benefits of Working with a Licensed Insolvency Trustee

There are some major benefits to working with a LIT. Here are just a few:

Expert Guidance

LITs are experts in debt relief. They have gone through years of training and are fully equipped to give you the best advice for your situation.

Legal Protection

When you work with a LIT, you get access to legal debt relief solutions that are protected by federal law. This means your creditors must stop collection efforts, which can give you some much-needed breathing room.

Non-Judgmental Support

Talking about your financial struggles can be tough, but LITs are here to help, not judge. They understand that financial issues happen to the best of us, and their goal is to provide a safe, supportive environment.

Personalized Solutions

Everyone’s financial situation is unique. LITs will create a plan that is personalized to your specific needs, making sure you get the best possible outcome.

Learn How Farber Can Help

If you are feeling overwhelmed by debt, remember that you don’t have to tackle it alone. At Farber Debt Solutions, our Licensed Insolvency Trustees are here to help you find the right solution, all while offering the judgment-free, supportive environment you deserve. Contact us today for a free consultation. We are here to listen and guide you towards a better financial future.