A change is coming for Bankruptcy Trustees, but it won’t affect their ability to help Canadians solve their money and debt issues. As of April 2016, Bankruptcy Trustees will have a new designation and will be known as “Licensed Insolvency Trustees”, or LIT.
Just as Bankruptcy Trustees are regulated and licensed by the federal government through the Office of the Superintendent of Bankruptcy (OSB), so LIT will be as well. There will be no change in the actual duties of a Trustee, simply what they are called in advertising, communications, and professionally when referring to helping individual consumers with their debt. When working with corporations and corporate bankruptcy, the Bankruptcy Trustees will keep using their current title.
The new LIT designation will only be given to individuals who have completed rigorous schooling and testing to be licensed as a Bankruptcy Trustee. This gives them the power to administer the laws within the Bankruptcy and Insolvency Act (BIA). When the new designation comes into effect in April 2016, only Bankruptcy Trustees will be legally known as LIT.
Currently, people seek out Bankruptcy Trustees for their debt and money crises, whether they’re looking for a bankruptcy or a consumer proposal, and for corporate insolvency issues, like receiverships and corporate proposals. Once the new designation comes into play, individual consumers will seek out an LIT, knowing that they are getting a professional who is bound by law to help them fairly and expertly with resolving their debt. Corporate clients will continue to work with Bankruptcy Trustees for their insolvency needs.
Working with an LIT will give people the same benefits as working with a Bankruptcy Trustee now – confidence in their licensed skill-set, regulated operations, and qualified expertise. Other organizations offer debt solutions provided by ‘debt consultants’, ‘insolvency experts’, and the like, but there is no guarantee that these people will actually be able to legally help with consumer debt. And while working with an LIT gives you the peace of mind that you will only be charged a regulated fee, working with other, non-licensed establishments may cost you more money for a solution that’s not guaranteed. Working with a LIT is risk-free, just like working with a Bankruptcy Trustee is now.
The new designation also gives Bankruptcy Trustees a more accurate name for what they actually do. Right now, the word ‘Bankruptcy’ in their title carries a lot of weight, most of it negative. People don’t want to go bankrupt, they’re afraid they’ll lose everything and they’re ashamed they’re in the position they are in. Although bankruptcy actually means a solution to your debt that gives you a fresh financial start, it is rarely seen that way. With the new designation, the focus is on the most important facets of a Bankruptcy Trustee’s role. A Licensed Insolvency Trustee or LIT stands for the following things:
“Licensed” means regulated, governed by law and the government. It means that not just anyone can become an LIT, but that it requires accreditation and a body to oversee it.
“Trustee” focuses on the fact that LITs are responsible for the laws and regulations in the BIA. Someone who is working with consumer debt and doesn’t have that title has no obligation to the BIA and therefore is not as sure.
“Insolvency” covers any unfortunate person who cannot pay back the debt that they owe. It can mean people with credit card debt, people with maxed out lines of credit, or people who are income rich, yet debt poor. It can mean people who need to declare bankruptcy or people who need to file a consumer proposal, which gives them relief from the interest on their debt, plus reduces the amount they have to pay. It is a broader term than just ‘Bankruptcy,’ and more accurately describes the actual role of a Bankruptcy Trustee.
What a Bankruptcy Trustee is really doing is helping people reorganize their finances and their debts so that they can get a second chance and the ability to rebuild their financial lives. It’s a little known fact that when you file a consumer proposal or file for bankruptcy that you will be enrolled in debt counselling sessions to teach you how to budget, how to manage your money, and how to intelligently use credit. The services provided by Bankruptcy Trustees and LIT have a greater scope than just bankruptcy.
Talking to a Bankruptcy Trustee, or an LIT as they’ll be known in April 2016, is not just a step towards bankruptcy. It is choosing a solution to debt, making a decision to fix the problem, and getting a professional to help you do it. Just as a Bankruptcy Trustee can help you make those first steps today, an LIT will also be just as capable.