Filing a consumer proposal or bankruptcy can feel overwhelming — but you don’t have to go through it alone.
At Crowe MacKay & Company, our experienced Licensed Insolvency Trustees (LITs) are here to guide you through every step of the process.
Below are answers to the most common questions we receive about debt, bankruptcy, and consumer proposals.
Effective April 1, 2016, “Bankruptcy Trustees” became known as Licensed Insolvency Trustees (LITs).
While the title changed, the duties remained the same. The new designation emphasizes that LITs provide a full range of debt management solutions — not just bankruptcy — including consumer proposals and other restructuring options.
Only professionals who complete extensive education, training, and federal licensing requirements through the Office of the Superintendent of Bankruptcy (OSB) may use the title “Licensed Insolvency Trustee.”
LITs are the only professionals in Canada legally authorized to file and administer insolvency proceedings, including consumer proposals and bankruptcies.
Key reasons to work with an LIT:
You should speak with an LIT if:
An LIT can:
Bankruptcy is a legal process that helps individuals who can’t repay their debts.
By assigning your assets to a Trustee (as required under the Bankruptcy and Insolvency Act), you can eliminate most unsecured debts and stop creditor collection actions.
Bankruptcy should only be considered after exploring all other options.
The cost of bankruptcy is set by the government tariff under the Bankruptcy and Insolvency Act.
As of current standards:
The exact cost may vary based on your income and situation.
No, you will not lose everything. Some assets are exempt from seizure under provincial law.
In British Columbia, you can keep:
If your assets are fully encumbered (e.g., your car loan equals their value), you often keep them by continuing to make payments to the lender.
Yes. All credit cards in your name must be surrendered to your Trustee.
If you need one for business travel, you may use a card issued to someone else (e.g., your spouse or employer) or purchase a prepaid credit card.
Yes. All creditors must be listed in your bankruptcy or proposal — including friends and family.
The law requires that all creditors be treated equally.
Yes, you will be required to pay the bankruptcy fee or, if applicable, the surplus income. If your income is higher than the federal surplus income threshold, you’ll make monthly payments to your estate for the benefit of creditors based on your actual earned income each month.
Only 50% of your surplus income (income above the guideline) must be paid; you keep the other half.
Surplus income thresholds are updated annually by the Office of the Superintendent of Bankruptcy.
Yes. You must submit a monthly income and expense report by the 15th of each month.
This allows your Trustee to calculate any surplus income. Missing reports can delay your discharge.
Yes. Once you file for bankruptcy, creditors can no longer garnish your wages.
However, you must continue any required surplus income payments to your Trustee.
Surplus income is the portion of your income that exceeds the federal minimum standard needed to support your household.
You pay a portion of that surplus into your bankruptcy estate for the benefit of creditors.
Yes. You must file all outstanding tax returns.
In the year of bankruptcy, there will be two returns:
Any refunds for the year of bankruptcy go to your estate; any tax owing after bankruptcy is your responsibility.
If you go bankrupt, the co-signer becomes responsible for repaying the loan in full.
All debts, even co-signed ones, must be included in your bankruptcy.
No, any windfalls received before discharge — such as lottery winnings or inheritance — must be turned over to your Trustee for creditors.
If the windfall occurs after you have received your discharge, it’s yours to keep.
Yes. Some debts are not discharged, including:
Your debts are eliminated when you receive your discharge, not when you file.
Eligibility for automatic discharge:
If no one objects (creditors, Trustee, or OSB), you’ll receive an automatic discharge.
If there’s an objection, the Court may issue:
Only if it’s been seven years since you left school.
If it’s been less than seven years, student loans will survive the bankruptcy.
Yes. You must attend two credit counselling sessions, each lasting about an hour.
These sessions help you understand the causes of insolvency, budgeting, and rebuilding credit.
No. Bankruptcy is only one of several debt relief options.
An LIT can help you explore consumer proposals, debt consolidation, and repayment plans that better fit your situation.
A consumer proposal is a legally binding agreement between you and your creditors to repay a portion of your debts over a set period (up to 5 years).
You make one monthly payment that fits your budget, keep your assets, and stop interest and collection calls once creditors accept the proposal.
The federal tariff also regulates proposal costs.
You’ll pay a small deposit and then make agreed monthly payments, which cover both your settlement and the Trustee’s fees.
Yes. All creditors must be listed in your consumer proposal.
This ensures fair treatment for everyone under the Bankruptcy and Insolvency Act.
Yes. Your wages are yours to keep once the proposal is filed.
Creditors can’t seize them — though you must make the agreed proposal payments.
You can get your free credit report from either of Canada’s two credit bureaus by submitting a request form with copies of two pieces of ID:
Both allow you to request by mail, fax, or online.
For more information, visit the Financial Consumer Agency of Canada.
If you find an error, contact the credit bureau in writing and provide documents supporting your correction.
Once verified, the bureau must update your file and send you written confirmation.
Book a Free Consultation
Our licensed experts are here to answer all your questions about bankruptcy and consumer proposals. Whether you're an individual or a business, we’ll help you understand your options and guide you through every step of the process with care and confidence.
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