A new title, Licensed Insolvency Trustee (LIT), replaces the Trustee in Bankruptcy title in the context of consumer insolvency in Canada. For corporations and corporate bankruptcy, the existing name, Trustee in Bankruptcy, will continue to be used. This change results from a new Directive on Trustee Designation and Advertising
, released on December 2, 2015 by the Office of the Superintendent of Bankruptcy (OSB). The name change becomes effective on April 1, 2016, though some designated professionals can begin using the LIT name as soon as they sign and send in a consent agreement with the OSB.
Why was the Name Changed from Bankruptcy Trustee to Licensed Insolvency Trustee?
The trustee’s title was changed by the OSB in recognition of the need for better protection against misuse and abuse of the designation, especially by unlicensed providers. The change was sought by the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), which is the national professional association that represents members working in the insolvency system. CAIRP surveyed its members several times over the past few years and a large majority agreed that a new designation was needed.
Using the term “licensed” will more accurately reflect the position and promote professional regard for the role. A trustee licensed by the OSB is the most qualified professional to inform consumers about debt management solutions, yet studies show that many Canadians are unaware of the differences between a licensed and unlicensed provider. A 2015 Ipsos Reid poll, conducted on behalf of CAIRP, showed that a large proportion of Canadians don't know which professionals have a license and which professionals don’t. According to the poll, sixty percent of Canadians mistakenly believed that employees of debt settlement companies and credit counselling agencies are federally or provincially licensed debt-relief professionals.
Replacing the term “bankruptcy” with “insolvency” is more inclusive, reflecting that trustees do more than just provide bankruptcy services
. Licensed trustees can also arrange consumer proposals and division I proposals, among providing other services. The new name can help to correct a widely held misperception that trustees can only provide bankruptcy trustee services and therefore are an option of last resort.
Are There Changes in the Trustee’s Powers and Duties?
What Does a LIT Do?
As a first task, a LIT will meet with you to review your financial situation, evaluate the cause of your financial difficulties and advise you about your options. The LIT will investigate the creditor’s claims about what you owe to ensure that they are valid and help you to decide on a debt management solution. He or she will prepare and send the documentation necessary if you choose a consumer proposal
or personal bankruptcy
Once the official documents are in place (e.g., a consumer proposal is deemed approved), your LIT will administer your estate file and must protect the rights of creditors and debtors. He or she will collect and sell the assets that are required (some are exempt from seizure according to provincial and federal statutes). He or she will then distribute the necessary funds to your creditors. He or she will also make the payments to your creditors if you declared bankruptcy or oversee the process if a consumer proposal is in place.
If the debt solution you select requires that you undergo mandatory credit counselling, which is the case for bankruptcy and consumer proposals, then your trustee will provide the credit counselling sessions to you.
Your LIT will also ensure that you have access to mediation and help with negotiation if there are any disputes (e.g., about any surplus income payments in bankruptcy situations).
The LIT is also required to evaluate your conduct, before and during your bankruptcy or consumer proposal. He or she will determine when to make the discharge application if you are undergoing a bankruptcy or confirm if your consumer proposal has been completed.
Contact the Debt Help Professionals at AC Waring & Associates Inc. in Edmonton
If you need debt relief in Edmonton and area, contact us at AC Waring & Associates Inc. for the most qualified advice
in the industry. LITs are the only professionals licensed by the federal government to manage debt restructuring under the Bankruptcy and Insolvency Act (BIA). A LIT, acting as a proposal administrator, professional credit counsellor or bankruptcy trustee in Edmonton and surrounding area, can provide free consultation advice, arrange a consumer proposal, credit counselling, debt restructuring or bankruptcy proceedings in Edmonton for you. Contact us
at AC Waring & Associates Inc. today at 1-800-463-3328 or 780-424-9944.