A Quick Guide: What is a Licensed Insolvency Trustee?
What is a Licensed Insolvency Trustee?
People who are in financial trouble and are feeling overwhelmed by debt need to meet with a professional to help them deal with their debt and get their life back on track. They should meet with a Licensed Insolvency Trustee (LIT) such as Crawford Smith and Swallow Inc.
So, What is a Licensed Insolvency Trustee?
LIT’s are licensed by a branch of the government called the Office of the Superintendent of Bankruptcy. This is part of Industry Canada.
We are the only group of professionals licensed to administer bankruptcies and proposals under the Bankruptcy and Insolvency Act.
To become an LIT, one must complete a program of studies and pass two levels of written examination. Once you have completed these, you must sit a final examination before an Oral Board.
You are also required to pass the Insolvency Counsellor’s Qualification Course.
Most LIT’s are also professional accountants. But this is not a requirement to enroll in the program. You must have a university degree to enroll.
LIT’s are not lawyers.
When you meet with someone to discuss your financial problems, make sure they are LIT’s.
What’s the Difference Between a Trustee in Bankruptcy and an LIT?
There is no difference.
We used to be called Trustees in Bankruptcy, but this changed in April of 2016.
After April, the Office of the Superintendent of Bankruptcy required us to change our title in all advertising. From that point on, we have used the name Licensed Insolvency Trustees.
The Office of the Superintendent of Bankruptcy believed the new title more accurately described the types of services we offer.
What are the Duties of an LIT?
When you see an LIT and file a bankruptcy or proposal with them, you are not hiring them. They do not work specifically for you.
Instead, we oversee the insolvency process. This means we have a duty of care to all stakeholders involved. That includes you, your creditors, and other people affected by your actions.
LIT’s are actually appointed by Official Receivers, who are employees of the Office of the Superintendent of Bankruptcy. Official Receivers oversee our administrations.
Your LIT will report all actions and important documents to the Official Receivers. We are not paid until the Official Receiver approves the work.
LIT’s help you assess your financial situation and discuss options available to you. We also explain how the alternatives work and how they will impact you.
Once you decide which option you would like to pursue, the LIT helps with the process of filing. Then we oversee the process to its end.
We do not work specifically for you, the debtor. However, we have a duty of care to you to ensure you are well informed of your rights and obligations.
But we also work for the creditors. In a bankruptcy, our main duty is to maximize realizations for the creditors. In proposals, we oversee the collection of funds and distribution to the creditors.
We are also responsible for informing the creditors of their rights and responsibilities. That goes for both bankruptcies and proposals.
Finally, we have a duty of care to any other stakeholders involved in your life. An example of this would be a spouse. While your spouse is not directly involved in your file, they it can still affect them.
What are the LIT’s Fees in Bankruptcies and Proposals?
Most personal bankruptcies are straight forward. They are called Summary Administrations.
With this type of bankruptcy file, the LIT’s fees are based on a tariff set out in the Bankruptcy and Insolvency Act. This tariff spells out the percentage of total proceeds collected in the bankruptcy that the LIT can take as fees.
When you file a bankruptcy, you pay a certain amount of money (usually on a monthly basis). The money you pay, along with any other funds collected by the trustee, such a tax refunds, goes into a special account.
When the bankruptcy is completed, the money is distributed according to very specific rules.
Apart from small draws we can take during the administration, the balance of our fees is taken at the end of the file. This is only done when we have gotten approval from the Official Receiver.
With proposals, funds are paid to the LIT over a period of time. These proceeds are then paid out to the creditors.
At the start of the filing, the LIT (acting as an Administrator) is able to take draws at specific times. Then, when each distribution is made to the creditors, the LIT can receive 20% of whatever is being paid out.
To Wrap up…
If you are looking for help to deal with your financial issues, make sure you contact a Licensed Insolvency Trustee, such as Crawford Smith and Swallow Inc.
There are firms advertising services to help with your debt. Many of these firms are not LIT’s. Instead, they are debt consultants who are not licensed by the government.
They cannot provide you the protection from your creditors given under the Bankruptcy and Insolvency Act.
Crawford, Smith and Swallow Inc. are LIT’s, and have been working in the insolvency field for over 40 years.
Contact our office to book a free consultation to discuss your financial problems.