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How a Licensed Insolvency Trustee Can Help You Eliminate Debt and Regain Financial Stability

  • Writer: Maha Sultan
    Maha Sultan
  • 2 days ago
  • 6 min read

Debt can be overwhelming, especially when it starts to impact your daily life. If you’re struggling with missed payments, collection calls, or even wage garnishments, it may feel like there’s no way out. However, you don’t have to navigate these financial challenges alone. A Licensed Insolvency Trustee (LIT) is a government-regulated professional who can provide legal and effective debt relief solutions tailored to your situation.

If you're wondering how a Licensed Insolvency Trustee can help, this guide will walk you through their role, the solutions they offer, and how they can help you achieve financial freedom.

Table of Contents:

 

Understanding the Role of a Licensed Insolvency Trustee

A Licensed Insolvency Trustee (LIT) is the only professional in Canada authorized and regulated by the federal government to administer consumer proposals and bankruptcies. Unlike debt consultants or credit counselors, LITs are legally required to act in the best interest of both debtors and creditors, ensuring fair and transparent debt relief solutions.

What Does a Licensed Insolvency Trustee Do?

A Licensed Insolvency Trustee can:

  • Assess your financial situation and provide a clear picture of your debt relief options.

  • Negotiate with creditors to reduce or eliminate a portion of your debt.

  • Stop collection calls and wage garnishments by legally protecting you under the Bankruptcy and Insolvency Act.

  • Help you avoid bankruptcy by offering alternatives such as a consumer proposal.

  • Guide you through the bankruptcy process, if necessary, ensuring you meet all legal obligations.

With consumer debt levels in Canada surpassing trillions of dollars, many individuals are turning to government-approved debt help to regain control over their finances.

Signs You Should Consult a Licensed Insolvency Trustee

Many Canadians delay seeking debt help because they hope their financial situation will improve on its own. However, if you experience any of the following warning signs, it may be time to consult an LIT:

  • You’re struggling to make minimum payments on credit cards or loans.

  • Your debts keep growing despite making payments.

  • You’re relying on new loans or credit cards to pay off existing debts.

  • You’re receiving collection calls, legal notices, or facing wage garnishments.

  • You have little to no savings and live paycheck to paycheck.

Recent data shows that nearly 50% of Canadians live paycheck to paycheck, making it increasingly difficult to keep up with rising debt payments. If these situations sound familiar, a Licensed Insolvency Trustee can provide a clear and structured debt relief plan that fits your needs.


5 Signs You Need to Consult a Licensed Insolvency Trustee
 

Debt Relief Options Provided by a Licensed Insolvency Trustee

An LIT offers multiple debt relief solutions depending on your financial situation. The two most common options include consumer proposals and bankruptcy.

1. Consumer Proposal: A Bankruptcy Alternative

A consumer proposal is a legally binding agreement between you and your creditors, allowing you to reduce your debt and extend your repayment period without declaring bankruptcy.

Benefits of a Consumer Proposal

  • Debt reduction: You may only have to repay a portion of your total debt.

  • Stops interest charges: Once filed, interest on your debt stops accumulating.

  • Protect your assets: Unlike bankruptcy, you don’t have to give up your home or car.

  • Prevents legal action: Creditors cannot sue you or garnish your wages.

  • Stops collection calls: Once a consumer proposal is in place, debt collectors must stop contacting you.

With consumer proposals accounting for nearly 70% of all insolvencies in Canada, more individuals are using this option as a bankruptcy alternative to regain control of their finances.

2. Personal Bankruptcy: A Last Resort for Debt Relief

If your debt is unmanageable and a consumer proposal is not a viable option, bankruptcy may be the best solution. Bankruptcy is a legal process that allows you to eliminate most of your debts and get a fresh financial start.

How Bankruptcy Works

  • Immediate debt relief: Once you file for bankruptcy, creditors must stop all collection actions.

  • Debt elimination: Most unsecured debts (credit cards, personal loans, payday loans) are discharged.

  • Short repayment period: Depending on your financial situation, bankruptcy typically lasts 9 to 21 months.

  • Legal protection: Your wages and essential assets are protected under the law.

Although bankruptcy does impact your credit score, most individuals start rebuilding their credit within two years after discharge.

Myths About Licensed Insolvency Trustees and Debt Solutions

Many people hesitate to seek professional help because of common misconceptions. Let’s clear up some myths:

  • Myth #1: Licensed Insolvency Trustees only offer bankruptcy.

    • Fact: LITs provide multiple debt solutions, including consumer proposals, debt counselling, and financial planning.

  • Myth #2: You lose everything when you file for bankruptcy.

    • Fact: Many essential assets (home, car, RRSPs) are protected, depending on your situation.

  • Myth #3: Bankruptcy ruins your credit permanently.

    • Fact: While bankruptcy does affect your credit, over 60% of individuals who complete the process start rebuilding their credit within one year.

The Benefits of Choosing a Licensed Insolvency Trustee

A Licensed Insolvency Trustee is your best option for professional, government-regulated debt help. Here’s why:

  • Government Approval: LITs are regulated by the federal government, ensuring ethical and transparent services.

  • Legal Protection: Filing a consumer proposal or bankruptcy stops creditor harassment and legal action.

  • Personalized Debt Relief Plans: LITs assess your financial situation and recommend solutions tailored to your needs.

  • Financial Education: Beyond debt relief, LITs provide tools to help you manage your money better and avoid future debt problems.

With personal insolvencies rising by nearly 10% year-over-year in Canada, more people are seeking professional help to regain financial stability.

Steps to Work with a Licensed Insolvency Trustee

If you’re ready to take control of your debt, here’s what to expect when working with an LIT:

  1. Schedule a Free Consultation – The first meeting is confidential and helps the LIT understand your financial situation.

  2. Receive a Debt Assessment – The LIT will analyze your income, expenses, and debts to determine the best solution.

  3. Explore Your Options – Whether it’s a consumer proposal, bankruptcy, or another alternative, the LIT will guide you through the process.

  4. File the Necessary Documents – If you choose a debt relief solution, the LIT will handle all legal paperwork.

  5. Start Your Path to Financial Freedom – With a structured plan in place, you can regain financial stability and work toward a debt-free future.

SCB Debt Solutions Is Here to Help

Debt can feel overwhelming, but you don’t have to face it alone. With the help of a Licensed Insolvency Trustee, you can explore legal, government-approved debt solutions that provide relief and long-term financial stability.

At SCB Debt Solutions, we specialize in helping Canadians navigate financial challenges through consumer proposals, bankruptcy alternatives, and expert debt counselling. Our team is committed to providing transparent, judgment-free guidance to help you regain control of your finances.

If you’re struggling with debt, take the first step today. Contact SCB Debt Solutions for a free consultation and start your journey toward a debt-free life.

 

FAQs on Licensed Insolvency Trustee

Q1) How much does a Licensed Insolvency Trustee cost?

LITs operate under government regulations, and their fees are set by law. The cost depends on the debt relief option you choose, but initial consultations are usually free.

Q2) How to Find a Licensed Insolvency Trustee Near You?

Finding a Licensed Insolvency Trustee near you is simple. Here are a few ways to locate a qualified professional:

Q3) Will my employer or family find out if I work with an LIT?

Licensed Insolvency Trustees keep your financial situation confidential. Unless your wages are being garnished or legal action is involved, your employer and family members do not need to know.

Q4) What’s the first step to working with a Licensed Insolvency Trustee?

The first step is scheduling a free consultation. The LIT will assess your financial situation, explain your options, and help you choose the best path toward financial freedom.

Q5) Can an LIT help me if I don’t want to file for bankruptcy?

Yes! Bankruptcy is a last resort. Licensed Insolvency Trustees offer alternatives like consumer proposals, which allow you to reduce your debt and create a manageable repayment plan without declaring bankruptcy.

 
 
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