LIT or Debt Consultant: Here’s What You Need To KnowNov 21, 2018
With many Canadians feeling overwhelmed by debt and the majority aiming to make reducing the amount of personal debt they carry a top priority, searching for help with debt relief is a great step. It’s important, however, to ensure you choose the right debt relief professional to work with and understand their role.
According to a recent survey, only 2 in 10 Canadians know what a Licensed Insolvency Trustee (LIT) does and how they can help. For Financial Literacy month, here’s the scoop on how an LIT may be able to help you with your debt and how they compare with other debt relief professionals.
As the name suggests, Licensed Insolvency Trustees are licensed by the Office of the Superintendent of Bankruptcy (OSB) and are federally regulated. As such, when working with an LIT, you can rest assured that they are qualified and have the skills, training and experience needed to earn their licence. Additionally, their fees are also regulated and set by the government.
Debt relief professionals, such as debt consultants, are not federally regulated or licensed. This means there is no standard training or qualifications they are required to take. Debt consultants are also not required to charge clients a standard fee.
Formal complaint mechanism
Part of being federally regulated means that there is a formal complaint system in place. If you ever experience a problem with your Licensed Insolvency Trustee, you can file a complaint with the Office of the Superintendent of Bankruptcy for review.
In comparison, as there is no federal regulations in place for other debt relief professionals, there is no formal method to file or track a complaint against this type of debt relief professional.
Not all Canadians with debt will benefit from working with a Licensed Insolvency Trustee. In order to determine whether working with an LIT fits your individual needs and circumstances, there is a free, no obligation, initial consultation that everyone can take advantage of. An LIT will review your finances and your budget and help you determine which debt relief option you should consider. If you do not require the help of an LIT as filing a consumer proposal or filing bankruptcy isn’t needed in your case, your Licensed Insolvency Trustee will then refer you to other trusted debt relief professionals, such as a credit counsellor, who can help you best for your situation. In comparison, initial consultations are not common with other debt relief professionals and are usually not free.
Filing a consumer proposal or filing for bankruptcy
A Licensed Insolvency Trustee is the only debt relief professional in Canada who is authorized to file both consumer proposals and bankruptcies on behalf of their clients. Licensed Insolvency Trustees also work with their clients throughout the process, dealing with creditors on their behalf, answering questions, providing support and managing any debt payments.
For more information about what an LIT can do for you, and for other resources to help you find debt relief, check out the Financial Consumer Agency of Canada. They have plenty of useful information to help you make an informed decision.
Did you know the difference between LITs and other debt relief professionals? What other questions do you have about working with a Licensed Insolvency Trustee?