Licensed Insolvency Trustee - Their Role in a Consumer Proposal

 

In Canada, a consumer proposal is a legal procedure that can only be administered by a Licensed Insolvency Trustee.  It is a form of debt relief solution that can help those who are in debt to get back on track following rules set by the Bankruptcy and Insolvency Act.

Many consumers in Canada choose to use a consumer proposal to pay off their debt. It is a popular alternative to bankruptcy and can be used by those who do not wish to go bankrupt and want to keep some of their assets.

Consumer Proposal Benefits

There are many benefits that come from using a consumer proposal instead of bankruptcy:

• It doesn't require an upfront lump sum payment
• You have the ability to negotiate with creditors for lower payments
• It allows you to keep your property, you can keep your house, car, and other assets
• Your credit score will not be affected as much as in bankruptcy
• You don't need to wait any set period before you can apply for credit again
• It can be tailored to the specific needs of the individual, and
• It can also help rebuild your credit score as long as you keep up with your payments

This form of debt relief has become popular because it offers a way for people with debt to get relief from the pressure of monthly payments. When you file for a consumer proposal, you must offer your creditors an amount of money that you can afford to pay back over a period of time. You will then make regular payments to the trustee who is managing your proposal until the debt is paid off.

If you have unmanageable debt and have no other way to pay creditors, filing for a consumer proposal may give some relief. It allows you to keep your assets and provides an affordable way to manage your monthly payments while giving you time to improve your financial situation. 

The best benefit is the automatic stay which provides you with legal protection from any collection activities that creditors have used against you to get what they are owed. As soon as the proposal is filed, the automatic stay immediately puts a stop to harassing phone calls, threatening collection letters, wage garnishments and lawsuits. 

Consumer proposals are often used when people have secured some form of collateral or equity in their home or business, because they will not lose these assets while they are paying back their debt.

What a Licensed Insolvency Trustee Can Do

Through the proposal, a licensed insolvency trustee or LIT makes a formal request to creditors to repay a portion of the debt over time. The LIT takes care of everything, from preparing and documenting the paperwork, liquidating your assets, negotiating with your creditors, informing the Office of the Superintendent of Bankruptcy and your creditors once the proposal is filed, distributing your monthly payments to creditors, representing you in meetings when required, and making sure you complete all the requirements.  From start to finish, the role of the licensed insolvency trustee is to oversee that the entire process is just and fair for both you and your creditors. 

A consumer proposal includes the following steps:

1. The licensed insolvency trustee makes a proposal to your creditors to pay a portion of your debt in a fixed monthly amount over a period of three to five years
2. The creditors will then vote on whether or not they approve of the proposal, if they do, then the proposal will be sent back to the court for approval
3. If it is approved, then the court will issue an order approving it and setting out how much each creditor should be paid and how long payments should take place.
4. Monthly payments are made to your LIT for a set period of time that is no longer than five years. You also have the option to make a lump-sum payment or a combination of a lump-sum payment and monthly payments, according to what you can afford.

A consumer proposal is a type of personal insolvency proceeding in Canada. The licensed Insolvency Trustee acts as the Consumer Proposal Administrator and is responsible for administering and mediating the legal procedure between the debtor and creditors according to the rules governed by the Bankruptcy and Insolvency Act of Canada.

To find out if a consumer proposal is a method of debt relief that can meet your financial needs, it is important to talk with a licensed insolvency trustee who is considered the highest debt professional in Canada licensed and regulated by the OSB.  All LIT’s provide a free confidential initial consultation as it is mandated by federal standards of practice. 

The trustee will look at your income and assets you may own, such as your house and vehicles to get a clear picture of your financial situation. The licensed insolvency trustee is also obliged to explain all of your other choices to deal with your debt, which includes debt consolidation, debt management, counseling and bankruptcy so you can decide whether a consumer proposal is the best option or whether filing for bankruptcy will be a better choice.

Why Should You Trust a Personal Licensed Insolvency Trustee Toronto

If you are behind on payments for your credit card, loans and other debts and you’ve decided 
to face your financial situation head on, the first step is to find the best options available to deal 
with all of your debts. A personal licensed insolvency trustee Toronto can help you find a debt 
solution that is right for your unique situation to help you get out of debt and get your finances 
back on track.

Carrying too much debt is in itself a heavy burden. The harassing phone calls, the past due 
notices can lead to anxiety and debt stress. It can be more exhausting if you try to navigate 
through the process of finding a solution all by yourself. With all the companies offering 
different kinds of debt management solutions out there, it's difficult to know who to trust or 
where to turn.

Your safest approach is to seek sound advice from a Licensed Insolvency Trustee (LIT). In 
Canada, trustees are licensed and regulated by the Office of the Superintendent of Bankruptcy 
(OSB). This is what sets them apart from other debt management consultants who are 
governed by limited provincial regulations. Being regulated by the federal government, licensed 
insolvency trustees are held to a much higher standard of quality, accountability and regulation.

Fair and just

Trustees follow a strict code of conduct for professionalism, judgment and work ethic. As such 
when they provide their services, they must adhere to provincial and federal insolvency laws and 
ensure that both debtors and creditors are treated fairly and reasonably and whatever solution 
they come up for a particular debt situation is made without bias or favoritism.

Highly trained and qualified

Trustees are the only debt professionals authorized to administer government-regulated 
insolvency proceedings such as a consumer proposal or a personal bankruptcy. For this, 
trustees must obtain exceptional training, go through a rigid process for licensing and must 
pursue continuing education. Most have a university education and are active CPA’s. To qualify 
for a license, they complete a three year bankruptcy law course, work in a trustee office to gain 
experience, go through an oral board exam and are investigated by the RCMP for good character 
and reputation. Ongoing education is mandatory for them to be able to keep up to date with 
changes in the law.

Compassionate and generous

Licensed Insolvency Trustees are required by the Bankruptcy and Insolvency Act of Canada to 
give you all the information you need to help you make the best decision for your own unique 
financial circumstances. Thus, they provide a free and confidential consultation to all individuals 
who come to them for help during which they assess the debt situation and provide independent 
and impartial advice on all possible options. Other debt consultants can offer guidance and 
support on informal debt solutions, but only a Licensed Insolvency Trustee can provide 
comprehensive information on all debt relief services, including the informal and formal ones. 
They will explain each solution thoroughly, pointing out important details on why one solution is 
better than the other. If a consumer proposal or bankruptcy is your best option, they can 
administer the whole process for you from beginning to end. If you need a less drastic solution, 
they can help you find a reputable credit counselor or financial advisor who can give you the help 
you need.

If there’s only one debt professional you can trust in this treacherous debt market filled with 
countless organizations promising to get you out of debt for good, you must only trust a  
personal licensed insolvency trustee Toronto and no other. You can definitely trust their expertise, 
reputation and ability to help you find a solution that can lead you to a debt free life.

Can Brampton Consumer Proposals Help You Pay Off Your Debts?

For many  people in the Brampton region who are financially distressed, Brampton consumer proposals may be one possible debt solution for their personal financial problems. It’s one of the legal options for debt relief made available by the federal government through the Bankruptcy and Insolvency Act.

A consumer is a legal agreement between you and your creditors. Basically, your creditors agree to a reduced amount of your debt and, in turn, you agree that you will pay back the whole amount within the period negotiated, which can be from three up to five years.

Many people in Brampton prefer this method to help them pay off their debts over filing for bankruptcy for many reasons:

Affordable payments

One of the best advantage of consumer proposals is the ability it gives to make repaying debts affordable. If you’re having trouble making monthly payments, a consumer proposal can reduce the balance on your debt and helps you to pay them off in a timeline that is manageable for you. You and a licensed insolvency trustee will work out a monthly amount you can afford to pay. The LIT will then present this offer when negotiating with your creditors. Once your proposal is accepted, you will start making one monthly payment to your trustee who then distributes the money to your creditors. One really good thing with working with a trustee is that he will review your current financial state before making any offer to your creditors, making sure that you have enough money to pay for your debts so that you don’t default on the agreement.

Lower total debts

In a consumer proposal, you’re essentially making a deal with your creditors. You’re basically asking them to to help you get out of debt in a way that you can afford to and to give you more time to do so. So your creditors agree to forgive part of your total debt and to fully restructure whatever amount is outstanding into a smaller sum with a payment plan that you can manage and which is also fair to them. Unlike a loan consolidation where you pay your existing debt with another loan, a consumer proposal lowers the total amount you owe and allows you up to five years to pay off your debts without any interest accumulating. In many cases, it can reduce debts by up to eighty-five percent.

More flexibility

A consumer proposal offers more flexibility than a bankruptcy in several ways.
You are not required to report your income to the trustee.
You do not have to make surplus income payments.
If your financial circumstances change and you are earning more income, you can accelerate your payments and pay it off early.
You have control of your assets and can retain your house, car and manage and make withdrawals from your bank and investment accounts freely.

Stop all collection activities

A consumer proposal is one way to legally stop creditors from contacting you.
Once you file a consumer proposal and your trustee notifies your creditors, they are required by law to stop all interest charges, phone calls, collection letters, wage garnishments and any threats of legal action.


If you live in Brampton and have unsecured debt that is more than $5,000 but less than $250,000, you might want to think if Brampton consumer proposals can work for you. With a reduced balance on your debt and a set timetable to pay them off, it can likely help you to become debt free in no time at all.