A Licensed Insolvency Trustee (LIT) is a federally regulated professional licensed by the Office of the Superintendent of Bankruptcy (OSB) to administer insolvency proceedings in Canada. Only LITs can legally administer consumer proposals and bankruptcies under the Bankruptcy and Insolvency Act.
If you're dealing with serious debt problems in Canada, a LIT is the professional you need. Initial consultations are always free.
Many Canadians confuse LITs with for-profit debt settlement companies. The differences are critical:
Credit counsellors at non-profit agencies offer debt management plans (DMPs) — structured repayment at reduced interest. This is a valuable service for moderate debt levels. LITs offer consumer proposals and bankruptcy — appropriate when debt is too large for a DMP or when the client needs legal protection from creditors.
A good LIT will tell you if a DMP would serve you better and refer you to a credit counselling agency if appropriate.
Your free initial consultation typically takes 60–90 minutes. The LIT will ask about:
The LIT then presents your options — they are legally required to explain all options, not just proposals or bankruptcy. If you qualify for a DMP, they'll tell you. If a proposal makes sense, they'll outline what you'd likely pay.
LIT fees are set by federal regulation. For consumer proposals, fees come from the payments made under the proposal — you don't pay the LIT separately. For bankruptcy, fees are similarly regulated. There is no hidden cost and no large upfront payment for legitimate LIT services.
Get a second opinion. Most LITs encourage it. The right LIT for you is one who explains all options clearly and isn't rushing you into any specific solution.
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