Fact: Consumer proposals and bankruptcies are two legal debt settlement options available through the Bankruptcy and Insolvency Act. Both processes can only be administered by a Licensed Insolvency Trustee (LIT). That being said, you do not have to go directly to a Licensed Insolvency Trustee for a consumer proposal or bankruptcy. In fact, you are better served with your own representation.

This week, our aim is to clear up some of the confusion regarding Licensed Insolvency Trustees and how they work.

When you’re struggling financially, are finding it difficult to make your monthly payments, or have missed several payments, there are numerous options that exist to help you regain control. Two of those options are a consumer proposal and bankruptcy.

As mentioned, both must be administered by a Licensed Insolvency Trustee. However, the problem here is that, while LITs claim neutrality – they say they represent both parties (you and the creditor) – they have an obligation to maximize the return for the creditor.

Does this make sense? Compare it to real estate. If you were buying a new home, would you want the same real estate agent representing you and the person selling their home to you? Since that agent is paid on commission, their goal would be to get as much money from you, the buyer, as possible. How can this result in a fair settlement?

It is much the same with a consumer proposal, as the amount a Licensed Insolvency Trustee is paid depends on the amount of the proposal agreed upon. So, in a nutshell, the higher the proposal, and thus the more you have to pay, the more the LIT earns. So, if the LIT is getting paid according to the amount of the proposal, what is there to motivate them to get as small a proposal as possible.

If you’re financially strapped, every cent counts. If you go directly to a Licensed Insolvency Trustee, you can’t be guaranteed the best deal. That can only be obtained through your own representation, someone who is hired by you to protect your money.

Furthermore, if you go directly to a Licensed Insolvency Trustee you may only be given the option of a consumer proposal or bankruptcy, even if there are more valuable solutions out there, such as mortgage refinancing or even just a strict budgeting plan.

At DebtCare, our goal is to get the best deal for you. We are here to protect you and only you. Want valuable advice and real protection?

Call us today at 1 (888) 890-0888.