Do I Have to Declare Bankruptcy if I Call a Licensed Insolvency Trustee?

a debt advisor explaining a financial plan to a couple dealing with debt

In recent years, more and more Canadians have been struggling with overwhelming debt.

From overuse of credit cards to job loss and medical expenses, debt can be caused by various factors, some of which we have no control over.

Dealing with debt is one of the most emotionally draining and challenging times in an individual’s life, but luckily everyone gets a chance to start fresh. Many believe bankruptcy is the only way out of debt, although that’s not always the case.

A handful of other solutions exist that can be effective depending on the situation. Choosing the right debt advisor is the first step in your debt recovery process.

What Is a Licensed Insolvency Trustee?middle aged couple working with an LIT to work through their debt

Licensed Insolvency Trustees (LITs) are the most trained and educated debt experts in Canada. They are professionals who maintain a high standard of ethics and can provide you with financial advice and services of the highest quality.

While LITs are assigned to sell your assets and distribute payments to creditors, they are also expert debt consultants.

They can draft up consumer proposals, counsel you on debt management, and negotiate debt settlements. Best of all, they’ll communicate directly with your creditors on your behalf once you’ve filed for bankruptcy or a consumer proposal.

With a Licensed Insolvency Trustee, you’ll no longer have to deal with harassing phone calls from creditors and can have peace of mind knowing no legal action can be taken against you.

Understanding Your Debt Relieving Solutions

Bankruptcy should be considered as a last resort for dealing with debt.

Before declaring bankruptcy, your Licensed Insolvency Trustee will discuss your financial situation with you. Factors such as what debts you owe, your income, and what assets you own will help determine which debt-relieving solution is right for you.

A debt management plan will help you pay off your unsecured debts in full but at a reduced interest rate or with fees waived. However, you won’t be able to use your credit cards during this period until you complete the plan.

You also have the option to take out a debt consolidation loan if you have the right credit capacity. This allows you to combine credit cards and bank loans into one single loan. While you’ll still be in debt, it makes payment much more manageable.a woman looking stressed as she reviews her finances

Another option that’s becoming more popular is a consumer proposal. Your Licensed Insolvency Trustee will negotiate on your behalf with creditors to come to an agreement and settle your debts. A consumer proposal is a great solution as it’s a win-win for both parties. Creditors will receive an amount of money and you will be able to pay off your debt faster.

Ottawa’s Debt Solution Provider

If you find yourself dealing with crushing debt, it’s important to consider all your options.

Whether you want to draft a consumer proposal or understand how to declare bankruptcy, our Licensed Insolvency Trustees can guide you through the process and explain all available options to you.

At Lazard and Associates, we pride ourselves on providing world-class debt-relieving solutions and credit card counselling. We’ll help you reestablish your credit, pay off your debt, and live a quality life.

Get in touch with us to learn more about declaring bankruptcy and book your consultation today.