When you are struggling with debt and embarrassed by your financial situation, it is hard to take the first step to reach out for help. The internet is a good resource for researching debt relief solutions and budgeting tools. When researching, you will find many debt consultants who offer to “reduce your debt by 80%” or state they are the only ones advocating for you or acting in your best interest in an insolvency filing. They will review your financial situation (like a trustee would), explain all possible solutions (again, like a trustee would), charge you a fee, and then if you need to file a consumer proposal or a bankruptcy, they will refer you to a Licensed Insolvency Trustee (“LIT”).
LITs are the only ones licensed by the Office of the Superintendent of Bankruptcy to file a bankruptcy or proposal. LITs are bound by legislation, standards, and Rules of Professional Conduct. A LIT must perform a detailed assessment of your financial situation and explore all possible solutions with you – including a consolidation loan, debt management program, consumer proposal and bankruptcy. LITs understand the “fresh start” and rehabilitation principles of the legislation and want to obtain the best solution for you. LITs also deal with creditors regularly and can provide advice on what percentage of recovery creditors would likely accept in a consumer proposal based on your specific financial situation.
In my experience, a debt consultant will not get you a better deal with your creditors and will only end up costing you additional, unnecessary fees. Reach out to a LIT to obtain a free, non-judgmental consultation on solutions that work best for you.
By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)
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