How Much Do You Have To Pay To Get Help From A Licensed Insolvency Trustee?

How Much Do You Have To Pay To Get Help From A Licensed Insolvency Trustee?

Here in Canada, the only way to file a bankruptcy or a Consumer Proposal is to meet with a Licensed Insolvency Trustee (also known as an LIT, and sometimes referred to as a Bankruptcy Trustee), who will file the paperwork on your behalf.

As a Licensed Insolvency Trustee, one of the most common questions we are asked when an individual first reaches out to us to discuss potentially making a bankruptcy or Consumer Proposal is: how much do I have to pay to see you?

This is a very valid question, especially since individuals seeking out the assistance of an LIT are struggling financially and don’t usually have a bunch of cash available to put toward resolving their financial issues.

The short answer is: a consultation with Charla Smith & Company, as with most Licensed Insolvency Trustees, is free. There is no cost to meet to discuss your options, so there is no risk in taking this step. But there’s plenty of reward, as you’ll get information about your options to handle your situation from a highly trained and knowledgeable professsional. Having this information often relieves a lot of stress, even if you’d rather you didn’t have to make use of those options.

After the initial meeting, more meetings or a series of phone calls and/or emails is often necessary for the LIT to collect all of the relevant information and for the individual to obtain a full picture of their options so that they can make the right decision about how to proceed. In most cases, these additional meetings or communications are also free of charge - the LIT usually does not receive any compensation unless the individual decides to engage them to make a bankruptcy or Consumer Proposal filing. The first payment an individual has to make is usually a small deposit that is used by the LIT to cover its out-of-pocket costs to file the proposal with the government and, if necessary, the court.

Once an individual has decided to file a bankruptcy or Consumer Proposal, they will commit to make certain payments and/or relinquish certain assets to the LIT, based on the requirements of the option they’ve chosen. Those funds/assets will be used to pay the LIT’s fees and, where applicable, provide a distribution to creditors.

The amount of a Licensed Insolvency Trustee’s fees is regulated by the federal government and based on a tariff, a formula which outlines the fees that LITs can charge for their services depending on the type of administration (ie. whether it is a bankruptcy or a Consumer Proposal) and the amount of funds collected by the LIT.

In addition to the tariff fees, the trustee may also charge for additional expenses that are necessary for carrying out their duties, such as legal fees, accounting fees, and other professional services. All of these fees and expenses are paid from the funds you've already agreed to pay over to the Trustee, and the Trustee will take their fees before distributing any remainder to creditors.

If you're interested in specific's, here is exactly how the tariff works:

In the case of a Summary Administration bankruptcy (where realizable assets are less than $15,000, which is most often the case for individuals), the tariff is:

(a) 100 per cent on the first $975 or less of receipts;

(b) 35 per cent on the portion of the receipts exceeding $975 but not exceeding $2,000; and

(c) 50 per cent on the portion of the receipts exceeding $2,000.

In cases where there would otherwise be no receipts (due to the individual having no un-protected assets and very low income), the LIT may request voluntary payments in an amount sufficient to allow them to recover their costs of administration under the tariff. These voluntary payments can vary from Trustee to Trustee, but typically total less than $2,000 for a first-time bankrupt.

In the case of a Consumer Proposal, the tariff is:

(a) $750 for filing the consumer proposal;

(b) $750 for obtaining approval or deemed approval of the consumer proposal by the court; and

(c) 20 per cent of the moneys distributed to creditors under the consumer proposal;

The funds the individual pays or the liquidation value of the assets they relinquish as part of the proposal will form a pot of money that is used to cover these fees and fund a distribution to their creditors. The amount the individual is required to put into this pot depends entirely on that person’s assets, debts, income, creditors, and family situation. The only way to get a reliable estimate of how much you’d have to pay in this situation is to contact a Licensed Insolvency Trustee to ask for a review of your options.


The above formulas apply to most insolvency filings made by individuals. However, there are some other types of administrations for companies or individuals with more complex situations. The tariff does not apply to those, and the LIT's fees and expenses can vary to a much greater degree, and sometimes the LIT will require you or a third pary to pay its fees up-front. In these types of situations, the best way to find out how much you'd have to pay is to schedule a consultation with a Licensed Insolvency Trustee.

If you’d like a more detailed explanation about how a Licensed Insolvency Trustee can help, or what you might have to pay to file a bankruptcy or Consumer Proposal, contact us for a free, no-commitment. Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee serving the southern Alberta region, which regularly helps individuals, including business owners, review their options for dealing with their debt. 

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.


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Frequently Asked Questions

No, a Licensed Insolvency Trustee is an impartial facilitator who communicates with all parties to make sure the process is transparent, and that everyone is following the required rules so that the process is orderly and predictable.

  • Typically, LITs focus on either consumer solutions or corporate solutions.
  • Consumer solutions include Consumer Proposals and bankruptcy.
  • Corporate solutions include Division I Proposals, bankruptcy, receivership, and plans under the CCAA (Companies Creditors Arrangement Act).

Charla Smith has experience delivering all of these options, so if you would like information on any of them, please contact us to find out more.

It can be hard to identify a debt consultant when you're viewing their advertising or website. Sometimes you might think you are dealing with a LIT. Debt consultants often refer to Consumer Proposals and sometimes imply that this is a service they can provide, even though they cannot.

According to Directive 33, issued by the Superintendent of Bankruptcy, "Licensed trustees shall identify themselves using the professional designation “Licensed Insolvency Trustee” or the acronym “LIT” in all communications or representations falling within the purview of a licensed trustee under the BIA".

Therefore, if it is not immediately clear that the company or individual is a Licensed Insolvency Trustee, chances are they are not. For a list of valid Licensed Insolvency Trustees, try the Find an active Licensed Insolvency Trustee page on the Government of Canada's website. Or, contact us and we can help you make sure you're dealing with a legitimate company.

The cost of a bankruptcy is determined based on many factors such as your assets, your income, and your family situation. However, you typically pay less in a bankruptcy than you would in a Consumer Proposal, because your creditors don't have as much ability to impact your payments in bankruptcy. For more information about how these options compare, reach out to us for a free consultation.

A Licensed Insolvency Trustee is your best resource to discuss whether a Consumer Proposal is right for you. For general information on Consumer Proposals, check out our Consumer Proposal page. However, the best way to find out what a Consumer Proposal would look like for you is to book a free consultation with a LIT.

Bankruptcy is a legal way to get some or all (depending on your financial situation) of your debt forgiven when you can't pay it. For more information, see our bankruptcy page or contact us.

Reach out to us. You can make an inquiry directly from our website by clicking here, or you can call or text us at 1-403-899-3890. We will respond quickly, and work with you to find a good time for the meeting.


With our experience and our caring approach, we will help you find the best option for debt relief based on your unique situation - from advice on talking to your creditors to a consumer proposal or bankruptcy, and everything in between. We are here to lift the burden caused by overwhelming debt. 

Contact us today at 1-403-899-3890‌ for a FREE, no-commitment meeting, and let us guide you to regaining your financial footing.

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