What is a Licensed Insolvency Trustee? A Licensed Insolvency Trustee (LIT) is an individual licensed by the Superintendent of Bankruptcy Canada to provide creditor’s counsel and represent the interests of creditors in bankruptcy. In other words, the LIT will protect your interests as a creditor. People are going through a difficult time in their lives, and sometimes, you may think the only way out is to declare bankruptcy. Technically, this may be true. However, filing for bankruptcy can have a lasting impact on your finances for many years to come. To help you decide on the best options for your situation, get to know what a Licensed Insolvency Trustee is and how it can help you.
What is a Licensed Insolvency Trustee?
You’ve gone through our debt relief options and determined that bankruptcy is the best option. It would help if you found a Licensed Insolvency Trustee (LIT) to help you file your bankruptcy. A Licensed Insolvency Trustee is an individual licensed by the federal government to administer consumer proposals and bankruptcies on behalf of individuals and businesses in financial distress. The trustee’s role includes:
- Helping individuals understand their legal rights and responsibilities.
- Determining whether they qualify for a consumer proposal or bankruptcy.
- Completing the required documentation.
- Ensuring that the terms of their insolvency are carried out as required by law.
The trustee can also provide financial counseling, including reviewing your monthly budget and spending habits and assessing your eligibility for different debt relief options. In Canada, trustees are appointed by the federal Department of Justice and receive their licenses after completing intensive training on all aspects of consumer and business insolvency administration. Only licensed trustees can administer bankruptcies and consumer proposals and offer credit counseling.
HowTo Become A Licensed Insolvency Trustee (Lit)
- You need to be 18 years of age or older.
- Be a Canadian citizen or permanent resident of Canada.
- Be of good character and reputation.
- Submit a satisfactory criminal record check to the Superintendent.
- Meet any other requirements set by the Superintendent
- Have a university degree in law, business, or commerce – You get trained and regulated by the federal government to make sure that you adhere to the highest ethics, education, and experience. You need to have received a Bachelor of Laws degree from a Canadian university recognized by the Federation of Law Societies of Canada or a civil law degree from a Quebec university authorized by Quebec law to confer such degrees and be admitted to practice law in at least one province or territory in Canada and be a member in good standing of the Law Society in that jurisdiction. You also need two or more years of practical experience as a lawyer in insolvency law, commercial law, or finance.
- Have a minimum of three years of experience in insolvency-related work. In addition to your professional training, you need to have extensive experience with personal finance and debt management to fully assess your financial situation and offer the best possible solution. Since trustees are involved with all aspects of both individual and corporate insolvencies, their experience provides them with valuable insight into the business.
- Pass an exam that tests their knowledge of the Bankruptcy and Insolvency Act (BIA). Once the Superintendent approves an individual of bankruptcy, they must complete the Registered Insolvency Trustee Examination within two years. The examination requires applicants to pass a rigorous theoretical and practical test covering all insolvency law and practice aspects. Once licensed, LITs must maintain their professional competence through continuing education courses and seminars.
- Be appointed by the Superintendent of Bankruptcy – You need to get licensed by the federal government through the Office of the Superintendent of Bankruptcy Canada (OSB). You are required to hold a valid license to be able to administer consumer proposals and personal bankruptcies.
- Obtain liability insurance coverage – You need to have obtained professional liability insurance coverage from a provider authorized to do business in Canada. The Superintendent requires that all LITs carry minimum errors and omissions coverage of
- $1,000,000 per claim and $2,000,000 annual aggregate obtained through your employer.
Licensed Insolvency Trustees are highly trained professionals in managing complex debt issues and resolving financial problems. They often have a background in law and accounting, which means they know what to look for when determining if another company or individual might be hiding assets to avoid paying creditors. The Licensed Insolvency Trustee can be a valuable resource for debtors and creditors alike. Licensed Insolvency Trustees help debtors get back on their feet and keep creditors honest, significantly benefiting any bankruptcy proceeding.