Crowe MacKay’s Licensed Insolvency Trustees are here to support you through times of financial stress. The insolvency team explains how they can help you navigate uncertain times and how their services translate to your wellbeing.
What is a Licensed Insolvency Trustee?
A Licensed Insolvency Trustee (LIT) is the only professional licensed by the government through the Office of the Superintendent of Bankruptcy. Credit counselling agencies and debt settlement companies are not the same as a LIT. A LIT is an officer of the Court and acts in a fiduciary capacity with a duty to protect the interests of all stakeholders. They make sure debtors are aware of everything in their case, including all debt solutions, and that creditors are not taking advantage or misrepresenting the circumstances. They also ensure creditors understand their rights and remedies.
How Can a LIT Help?
Licensed Insolvency Trustees are often vital for people struggling with financial hardships . Many LITs offer free consultations and subsequent guidance to help resolve debt trouble. An insolvency trustee can review your finances with you, including income and debts, to reach the best debt solution. A LIT will explain the options available to you when facing debt, and review what makes the most sense for your unique circumstances. Two of these options include filing for bankruptcy and filing a consumer proposal.
If you choose to file for bankruptcy or file a consumer proposal, a LIT can help you prepare all the necessary documents involved in either process and file it on your behalf. Further, they keep abreast of the situation to ensure any debtor and his or her creditors comply with the necessary protocol. Their work involved in an insolvency would include administrative work; enforcing regulations; administering creditor claims; asset realizations; distributions to creditors; counseling; requesting a discharge when the bankrupt individual becomes eligible (usually after nine or twenty one months); and taking care of the applications that accompany this process.
LITs not only help individuals by providing peace of mind, they also benefit the creditors by figuring out how an individual can pay off his or her debt. They ensure they receive all, most, or at least some, of the money owed to them. An insolvency consultant who will thoroughly work with you during your debt settlement process can actually help to avoid any issues that may otherwise arise, particularly when it comes to dealing with creditors.
Some signs that you may have a debt problem include:
- Continually going over your credit cards' spending limits
- Missing payments or paying only enough to cover minimum payments
- Borrowing money to make it to your next payday
- Missing utility bill payments
- Receiving pressure for payments from your creditors
What is a Consumer Proposal
A consumer proposal is another important debt repayment solution to consider. It involves creating a proposal to pay your creditors less than what you owe, to receive a longer time to pay, or both. There is flexibility in creating your proposal, as it can be based around your financial situation. Typically, a proposal is a percentage of what is owed to the creditors, paid over an extended period of time. The maximum term cannot exceed five years. Once your proposal is finalized, it will be presented to your creditors by a Licensed Insolvency Trustee. If the majority of your creditors accept the proposal, you will make payments to your Licensed Insolvency Trustee, and they will distribute the payments among your creditors. To be eligible to file a consumer proposal, the total amount of your unsecured debts must not exceed $250,000, not including the mortgage on your principal residence.
What Happens After the Acceptance of Your Proposal
If your proposal has been accepted, you will be responsible for complying with the terms of the proposal and attending two counselling sessions. You get to keep your assets provided that you have continued to make payments to your secured creditors who hold a charge against you. Once the terms of your proposal have been fulfilled, you will be issued a Certificate of Full Performance and you will be legally released from the debts included in your proposal.
What is Bankruptcy
Typically the last resort for individuals to address their debt is an assignment in bankruptcy. If you have exhausted all other options and are still struggling to repay your debt, assignment in bankruptcy can help you get a fresh financial start. When filing for personal bankruptcy you are allowing your LIT to deal with creditors on your behalf, which will prevent creditors from making harassing calls, suing, or sending threatening letters to you. In addition, when you make an assignment in bankruptcy you will be able to keep certain assets, this is determined by the province in which you reside.
Eligibility for Personal Bankruptcy
To be eligible for personal bankruptcy an individual must be insolvent. This includes, but is not limited to, the following:
- Liabilities greater than $1,000
- Inability to satisfy obligations as they generally become due
- Amount of debt exceeds value of assets
While you may consider yourself insolvent there may be other options available beside bankruptcy. Your first step should be to meet with a LIT.