4 Things To Consider Before You Call A Licensed Insolvency Trustee

1. Make sure they are actually a Licensed Insolvency Trustee

Unfortunately, there are many people out there who look to take advantage of people when they are vulnerable. Feeling overwhelmed and stressed out because of your debt makes you a potential target. Sometimes, people who are not Licensed Insolvency Trustees try to give the impression that they can help you make a Consumer Proposal or file a bankruptcy, when in fact they cannot. Instead, they may try to collect fees from you or trap you into an unnecessary or inadvisable loan arrangement before referring you to an actual LIT once it is clear you need to file a Consumer Proposal or bankruptcy.

You do not have to see a debt consultant before meeting an LIT; you can go right to the source and avoid paying unnecessary fees. If you want to know exactly who is licensed as an LIT, the best resource is the listing of LITs provided by the Superintendent of Bankruptcy (a department of the federal government), which you can find here.

2. Ensure they handle your type of situation

While all LITs are licensed by the government after proving they have the knowledge and professionalism to provide insolvency services, not all LITs focus on the same type of work. Some spend most of their time on large corporate restructurings. Others may provide only Consumer Proposals, without offering bankruptcies.

Therefore, depending on your situation, some LITs will be a good fit and others may not.

Unfortunately, this information is not available on the Superintendent of Bankrupt’s Find an LIT listing mentioned above, so you will have to do your homework to find an LIT that offers the services you need.

When in doubt, you can ask a trusted advisor like your lawyer or accountant to connect you with the right person. If that option doesn’t work, we suggest calling up a local LIT and simply asking them what services they provide. If they don’t provide what you are looking for, there is a good chance they can refer you to someone who does.

3. Find someone licensed in your area, preferably someone with a physical office there.

LITs are licensed by province, as there are provincial laws that impact insolvency matters and the LIT must understand these laws to properly carry out insolvency engagements. While some LITs choose to get licensed in multiple provinces, others prefer to focus on the province in which they are located. You will need to work with someone who is licensed in your province.

Even if an LIT is licensed in your province, they don’t necessarily need to have an office there. Since the COVID-19 pandemic, the government has relaxed rules that previously required the LIT to meet with you in person. However, you may find that working with an LIT that is actually located in your province is beneficial for a few reasons:

• They can more easily meet with you in person. You may think you don’t care about meeting with your LIT in person, but if things go awry and a difficult conversation is necessary, or you need help with something that is difficult to explain over a video call, you may be glad the option is there.
• They are more likely to have a wide network of local connections that they can refer you to, if needed. Having someone that can connect you directly with a local lawyer, food bank, or mortgage broker can be invaluable in supporting you with your overall financial situation.
• They may be better able to relate to your situation and provide useful advice. For example, their understanding of the local housing or employment market may make them better suited to providing you advice on budgeting and goal setting.

4. Get a sense of how they work

All LITs should be technically competent and provide professional service. And the fees they charge will usually be comparable, as most engagements are subject to fee calculations set by the government. However, that doesn’t mean all LITs are the same. LITs are not employed by the government or the court, though they are subject to oversight by those parties. Instead, LITs are independent business owners, just like most accountants or lawyers. They have their own administrative practices, and they manage their own staff as they see fit. This means that the experience you get from one LIT to another might be different.

That said, LITs are not able to simply do whatever you tell them to do. They are required to consider the interests of all relevant parties and act impartially in carrying out their role in your insolvency filing. Once you file a bankruptcy or a Consumer Proposal with a particular LIT, you cannot decide you don’t like them and transfer to another LIT, as their appointment is confirmed and fixed by the government. For this reason, it’s important that you get a feel for the LIT and their staff before you commit to working with them. Even though all LITs have to act impartially, some may still be a better fit for you than others. You may find that you can get a sense of whether it is a good fit by doing some or all of the following:

• Check out their reviews online
• Check the Better Business Bureau to see if they’re accredited and what rating they have
• Talk to others who have made an insolvency filing to see what their experience was like with their LIT
• Ask a trusted advisor, like a lawyer or accountant, who may have had some experience with some LITs
• Meet with them to get a feel for their personal approach and their office culture. It is okay to meet with more than one LIT before you decide to make an insolvency filing.

For people stressed about their debt, meeting with a Licensed Insolvency Trustee is the right call. Taking the time to work through the above considerations before you do so will help you find the right person.

Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee, serving the southern Alberta region. We regularly help individuals navigate their options for dealing with their debt, and we provide bankruptcy and proposal options. If you'd like a free, no-commitment consultation to review your options, contact us.

Disclaimer: This publication provides general information and should be seen as broad guidance only. The information contained herein cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon this information without obtaining specific professional advice relating to your particular circumstances. Charla Smith & Company Ltd. does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.