A Licensed Insolvency Trustee (LIT) is licensed by the Office of the Superintendent of Bankruptcy to help people who are struggling to pay their debts. LITS are debt-solutions experts who work 1:1 with their clients to find the best path forward for their unique financial situation.
Remember: LITs are also the only federally regulated debt advisors in Canada. Their fees are set by the Office of the Superintendent of Bankruptcy and they operate within the Bankruptcy and Insolvency Act of Canada to protect the rights of both debtors and creditors.
Finding the right LIT is different for everyone, but there are some non-negotiables that you can take to ensure that you are finding the right partnership for you, including:
Most LITs throughout Canada offer their initial consultation for free. There is no commitment when it comes to a consultation. The purpose of the meeting is to meet you, assess your situation, and talk about options.
There are several differences between a LIT and an unlicensed debt consultant. These include:
Insolvency is a term from bankruptcy law. If you are insolvent, it means your liabilities or debts exceed the value of your assets. You would also be considered insolvent if you are unable to pay your debts on time.
The primary difference lies in the presence or absence of collateral. Collateral is valuable because it serves as security for the repayment of a loan.
Our sole purpose is to help you, and you can rest assured that we are free of judgement. We understand how you’re feeling and remain steadfast in ensuring we can help lift that burden off your shoulders, empowering you to live a life free of financial worries.
Business Bankruptcy is an option for companies with overwhelming financial difficulties. Owners usually choose to file when they are insolvent, which may be due to:
You can declare Bankruptcy in Canada if you are:
If your business is incorporated, large or small, you must file for corporate bankruptcy. In this case, the business goes bankrupt, not the individual. The legal structure of a corporation protects the individual’s assets. The steps are basically the same as a personal bankruptcy, however, corporate can be more complicated, depending on the size and complexity of the organization.
Corporate bankruptcy can be a proactive choice whereby you voluntarily assign your assets to an LIT and file them with the courts. But it may also occur via provisions in Bankruptcy law.
Here are the two ways in which a business can automatically go into bankruptcy:
If your business is not a corporation, by law the owner(s) is the business. The assets of the business are personal, and they belong to the business owner(s). These types of businesses would file for personal bankruptcy since it is the individual who is bankrupt. This means that you are personally liable for any debt.
The first step is to meet with your LIT. From there, it might look a little like this:
A Division 1 Proposal is often described as a “compromise” made between debtors and their unsecured creditors. The proposal’s purpose is to lower the total amount of debts owed, making it easier for the debtor to repay their creditors. The proposal also helps unsecured creditors because it promises that they will receive payment.
A Division 1 Proposal is also designed for insolvent businesses that owe any amount of debt. A business does not need to have more than $250,000 in debt to qualify. The business can be in any industry, whether it is a small corporation or a large multinational corporation.
The Division I Proposal process in Canada is complex and varies from case to case. For most businesses and some individuals, it will include:
You may qualify for a consumer proposal.
A consumer proposal builds a bridge between the borrow and their unsecured creditors to lower the total amount of money owed. It’s designed to make the repayment process easier for the debtor and give the creditors more repayments than if they filed for bankruptcy.
These two proposals share the same purpose, however, Division 1 Proposals are available for individuals and businesses, but consumer proposals are only available for individuals. This is why businesses have no minimum debt total to qualify for a Division 1 Proposal in Canada.
Additionally, a consumer proposal has a cap for an applicant’s total debt. An applicant must have $250,000 (not including a mortgage) or less in debt to qualify. Anyone who reaches over that set limit is automatically disqualified and must look for another debt-relief strategy. Process and time limits are also differentiators.
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