Who Is Not A Licensed Insolvency Trustee
Anyone can offer debt relief advice or services in Canada but not all are licensed by the federal government to act as a licensed insolvency trustee.
Licensed insolvency trustees are required by law to disclose their licensed status in all of their advertising. If you are speaking to someone that hasnt told you they are a licensed insolvency trustee it is probably because they are not licensed. If their website does not specify that their firm or company are licensed insolvency trustees, then they are not, no matter that they have information about bankruptcy or consumer proposals on their website.
This is important because the most powerful debt relief tools available in Canada an assignment in bankruptcy and a proposal to creditors may only be administered by a licensed insolvency trustee. As I stated earlier, it is quite common for non-licensed debt counselling businesses to charge people a fee and then refer them to a licensed insolvency trustee for help. This begs the question, what services are they providing to debtors for the fees they charge? In my opinion, very little. Most licensed insolvency trustees do not charge people for their initial meeting. The session is designed to provide individuals with options and help them decide which solution makes the most sense for them.
Payments From Your Income
If you can afford it, the trustee will ask you to make regular payments towards your debts from your income through an income payment agreement . You enter an IPA voluntarily, but theres a written binding agreement between you and the trustee.
If your main or only income is state benefits, the trustee will not normally try to get an IPA.
If you cant agree on payment amounts for an IPA, the trustee can apply for an income payment order . If you dont meet these payments, the trustee can then apply to extend your bankruptcy.
The payments will come from surplus income .This is money you have left after paying your living expenses. Normally you will have to pay all of this surplus income as your IPA payment.
Payments normally last for 3 years . The court wont make an IPO if it leaves you without enough money to meet everyday needs.
The official receiver may use private debt collection agencies to collect the payments.
A fee will be charged in all bankruptcy cases where an IPA or IPO is set up. The fee is set at £150 which will cover the specific costs incurred by the Official Receiver of arranging and setting up your IPA / IPO and will be collected from the first payments you make into the arrangement. This fee is only chargeable on cases where a bankruptcy application was made or a petition presented on or after the 21 July 2016.
Bankruptcy Lawyer Or Licensed Insolvency Trustee
Posted on 21 October 2019
If you suddenly become insolvent, it can be confusing to understand whether you require a bankruptcy lawyer or a Licensed Insolvency Trustee. In this article, we will explain the role of a bankruptcy lawyer, and that of a Licensed Insolvency Trustee. Depending on your financial circumstances, we can help to determine which of the two professionals you require to gain debt relief. Most often, you will need a Licensed Insolvency Trustee. Spergel has a team of experienced Licensed Insolvency Trustees that have helped over 100,000 Canadians begin fresh financial futures.
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Completion Of The Administration By A Trustee Or Liquidator
When a trustee or liquidator has distributed all the assets, they will report to creditors on what they did during the insolvency and will give a summary of their receipts and payments. They will also seek their release from office. The creditors have a right to object to the release of the trustee or liquidator.
How Does An Individual Become A Licensed Insolvency Trustee
Many trustees come from an accounting background, but to obtain licensing from the OSB, would-be trustees need to undergo an additional rigorous training program and sit for licensing exams.
All trustees undergo a very specific training program, which helps them prepare for the necessary exams. This training is called the Chartered Insolvency and Restructuring Professional Qualification Program. The coursework covers the Bankruptcy and Insolvency Act , administering the BIA, personal and corporate insolvency, interviewing, counselling, and money management.
Throughout the training, trustees are required to pass exams. At the end of the training, following a final written exam, they are required to pass an oral exam in front of a Board of Examiners working on behalf of the OSB. Once they are licensed, trustees need to continue to uphold the rules of the BIA and the Office of the Superintendent of Bankruptcy in order to retain their license. Trustees are audited regularly by the OSB to ensure that they are doing so.
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Will My Canadian Student Loans Go Away If I Declare Bankruptcy
If you were a student, either part-time or full-time, less than seven years from the date that you declared bankruptcy, you will have to repay your student loan debt, including the interest charges. Check with Canada Student Loans to learn what they consider to be the last official date you were in school.
If your official last day is under seven years ago, you may still be able to get your student loan debts discharged. You can retain a lawyer and make an application to the court.
You must meet the following requirements:
- You have been out of school for a minimum of five years
- You acted in good faith with regard to the liabilities under the loan
- You have and will continue to experience financial difficulty to such an extent that you will be unable to pay the liabilities under the loan
Granted A Licence From The Superintendent Of Bankruptcy
One of the largest concerns for the profession is the ability to attract new talent. As outlined above the qualification is gruelling and takes a long time to complete.
According to the Superintendant of Bankruptcy, there were only 30 candidates to challenge the oral board exam last year. Of the 30, 24 were granted licenses.
This is down dramatically from 52 in 2014. There is also the concern that the average age of a Licensed Insolvency Trustee is 56 years old. With retirement looming the older LITs are going to need to bring in attractive talent somehow.
Although LITs are ageing and new LITs are not blistering the market, there is no concern for the industry anytime soon. According to the national LIT directory, there are 1,067 licensed insolvency LITs in Canada. In 2015 there were 125,000 consumer insolvencies.
That works out to an average workload of 117 insolvency filings per LIT.
Assuming that each proceeding takes 3 hours of LIT time, there is still plenty of capacity for the existing LITs to handle the workload.
How To File A Complaint
To lodge a complaint against a private trustee in a Chapter 7, 12 or 13 bankruptcy case, a consumer debtor may contact the U.S. Trustee Program field office in his region. Consumers can locate contact information for the appropriate regional office online on the U.S. Department of Justice website. In the case of criminal activity, it would be appropriate to contact the local U.S. Attorney’s Office and alert the court overseeing the case. Because private trustees are usually attorneys or CPAs and hold professional licenses in their state of practice, it might also be necessary to contact the state bar association or board of accountancy to file a separate complaint.
What Can A Licensed Insolvency Trustee Do For Me
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What Bankruptcy Services Do They Provide
Licensed insolvency trustees are the only persons permitted to administer bankruptcy and insolvency procedures in Canada.
Services include assignments in bankruptcy and consumer proposals. In fact, proposals to creditors now account for a significant portion of most licensed insolvency trustees work .
While there are a vast array of non-trustees advertising consumer proposals only a licensed insolvency trustee can file either of these proceedings.
Why Do People Declare Bankruptcy
Bankruptcy can be declared for a number of reasons it can be a sudden realisation of incremental debt that would be extremely challenging to pay back without support. Other common reasons for bankruptcy include recurring calls from creditors, or a difficulty in obtaining more credit. It could come about from a life event like a divorce, extortionate medical bills, or a job loss, which makes it difficult to pay back debt. Discover the advantages of filing bankruptcy with a trusted Canadian bankruptcy firm like Spergel.
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What Happens To Your Home
If you own your home it can be sold if it is the only way to pay your creditors.
If youre the only owner of the property:
- the value of the property after any secured debts have been paid transfers to the trustee. This is known as the beneficial interest and is sometimes called equity
- the legal title transfers to the trustee and a bankruptcy restriction is added to the land registry record. This will stop you from selling your home or making deals connected to it
The restriction will be removed once the trustee has been paid for their interest in the property.
If you own the property with someone else:
- your share of the property after any secured debts have been paid transfers to your trustee. This is known as the beneficial interest
- a Form J restriction is added to your Land Registry record and the trustee will be told of any deals affecting the property, including a sale
You can still sell the property, but the trustee will get your share of the money from the sale. The Form J restriction will be removed once the trustee has been paid this money.
The sale of your home
The trustee cant usually sell the property without your agreement for a year from the date of the bankruptcy order if you have a partner or children living with you.
You can stop a sale taking place later if a family member or friend buys the beneficial interest in your home. The buyer should contact the trustee.
How To Get In Touch With A Licensed Insolvency Trustee For Free
Licensed Insolvency Trustees are highly approachable online, by phone, or email. And you can enter a debt relief program without having to even meet in person. With the power of video conferencing technology you can stay safe and secure in your own home or office and still access this powerful debt forgiveness legislation, that is only available through Licensed Insolvency Trustees.
In fact at Bankruptcy Canada, we can recommend trustees in all provinces to help you out with debt.
Just fill in the form below and well contact you soon with a local licensed trustee to help you out. And of course, its free.
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Who Can File For Bankruptcy
Under the Bankruptcy and Insolvency Act, you are eligible to file bankruptcy in Canada if you are insolvent, which means:
If you meet the bankruptcy eligibility criteria, one of Spergels Licensed Insolvency Trustees will be able to walk you through the process of filing bankruptcy.
What To Watch Out For
In our view, a potentially risky way of finding a trustee is to go to one you are referred to by a for-profit debt relief company . The Office of the Superintendent of Bankruptcy, the government body that regulates insolvency trustees, has repeatedly warned that some debt relief companies are working with certain trustees to promote setting up consumer proposals in ways that expose consumers to unnecessary risk and needless expense. This government office has clearly stated that setting up consumer proposals in this fashion is not in the consumers best interest. In our view, this type of practice is only in the financial interest of those who are promoting this method of debt relief. Because of this risk, our best suggestion is to find out from a local non-profit credit counselling organization which insolvency trustees they would recommend in your area.
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Understanding Bankruptcy Trustee Responsibilities
A trustee’s responsibilities differ based on the type of bankruptcy proceeding they are attending. In a Chapter 7 bankruptcy proceeding, the action is essentially a liquidation. The trustee will manage the sale of the assets and then oversee the distribution of the proceeds to creditors.
With a Chapter 11 proceeding, the debtor, usually a business owner, hopes to emerge from bankruptcy and continue operation.
Another type of bankruptcy is Chapter 13. Individuals who undergo this bankruptcy wish to keep some of their assets in return for repaying certain debts.
How To Become A Licensed Insolvency Trustee
The Superintendent of Bankruptcy has the authority, under the Bankruptcy and Insolvency Act , to grant licences to Licensed Insolvency Trustees. Before granting a licence, however, the Superintendent must be satisfied that candidates meet certain qualifications, as described in Directive No. 13R6,
- be of good character and reputation
- be solvent
- successfully complete the Chartered Insolvency and Restructuring Professional Qualification Program , the CIRP National Insolvency Exam and the Insolvency Counsellors Qualification Course or the Practical Course on Insolvency Counselling and
- pass an Oral Board of Examination
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What Happens To My Regular Income If I Declare Bankruptcy In Canada
Your wages are not affected by your bankruptcy, but part of your duties during bankruptcy includes providing your trustee with your household monthly earnings and expenditures. Additionally, if your income changes or you gain or lose a dependent, you must inform your trustee.
You may be required to make monthly payments to your trustee. These are called surplus income payments. Your trustee determines whether you have to make surplus income payments based on your average earnings over the bankruptcy and the number of people in your household.
Watch the video below to learn more about surplus income payments.
Video transcript: Meet Stephanie, the mother of a young son, James, who is just about to enter Primary School. Recently, Stephanie has overextended her credit and, despite her best efforts, is unable to pay her bills. Realizing that she needed to speak to an expert, Stephanie found a Licensed Insolvency Trustee located in her area and has gone to meet with her. After speaking to the trustee, Stephanie has determined bankruptcy was the most appropriate option for her.
About Bankruptcy Trustees: What Is A Licensed Insolvency Trustee
A Licensed Insolvency Trustee is federally certified by the OSB. A trustee in bankruptcy is the old name for a LIT. LITs are the only debt professionals who are federally regulated and supervised professional that offers recommendations and solutions to individuals and businesses with financial problems.
LITs help people make informed choices to manage their debt difficulties. A bankruptcy trustee is the only expert licensed to carry out government-regulated insolvency proceedings such as:
- privately-appointed or court-appointed receiver or receiver and manager to administer receiverships Bankruptcy and Insolvency Act Canada .
- assisting people to restructure through consumer insolvency using a consumer proposal.
- helping people who owe more than $250,000 and companies by making a proposal to creditors as alternatives to bankruptcy.
- bankruptcy trustee/licensed insolvency trustee in a bankruptcy administration when a person or company is filing for bankruptcy.
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What Is A Licensed Insolvency Trustee & How Can They Help
The website of the Superintendent of Bankruptcy describes Licensed Insolvency Trustees as follows:
A Licensed Insolvency Trustee is a person licensed by the Superintendent of Bankruptcy to administer proposals and bankruptcies and manage assets held in trust. The trustee can give a debtor information and advice about both the proposal and bankruptcy processes and make sure that both the debtors rights and the creditors rights are respected.
when filing bankruptcy or a consumer proposal in Canada.
Trustees are also the most highly trained and educated Debt Experts in Canada. A significant number of Trustees in Canada have both an accounting designation and a university degree in addition to the Chartered Insolvency and Restructuring Professional Designation . In addition, all trustees must complete and pass a rigorous three-year education program on bankruptcy and insolvency practice and law and may also be investigated by the RCMP before being granted a trustee license. Ongoing professional development is mandatory for all CIRPs.
In most cases, it will cost you less to use a Licensed Insolvency/Bankruptcy Trustee than other debt consultants since Trustees have their fees regulated by the government.
Your Trustee will explain your duties in detail, to ensure that you complete your bankruptcy as quickly as possible.
When dealing with a Trustee you are protected as follows:
How Much Does It Cost For A Licensed Insolvency Trustee
Licensed Insolvency Trustees previously known as bankruptcy trustees are professionals accredited by the Canadian government to help Canadians with debt.
Although you might believe there is a fee to work with a licensed insolvency trustee, it is actually free of charge, according to the law. LITs are paid from the money that is recovered in the restructuring program that you choose. You arent required to pay them a separate fee.
Its your right as a Canadian citizen to consult directly with a licensed trustee, without any costs, to solve your issues with debt.
You can have a chat with a trustee for free to seek advice on how to deal with debt and which approach is best for you.
Licensed trustees can help you with:
- Creating and filing a consumer proposal
- Negotiating settlements with banks and insurers
- Making arrangements with creditors for you
- Providing financial / budgeting advice
- Filing for bankruptcy.
And while a finance consultant may charge you for advice on how to deal with your debt, a Licensed Insolvency Trustee is mandated by law to be paid from the funds from your chosen restructuring program and NOT from you.
Also, their advice is solid. All Licensed Insolvency Trustees study insolvency legislation for a minimum of 3 years before even being able to apply to be interviewed by the federal government for a license to practice. They also are investigated by the RCMP before a license is approved too.
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