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Debt Services for Canadians: How a Licensed Insolvency Trustee Can Help You Take Control of Your Debt

Life doesn’t always go according to plan. No one sets out to accumulate a mountain of debt but things happen, and debt happens. When you build up a collection of student loans, maxed out credit cards, and personal loans that you can’t afford to pay back, your debt can feel overwhelming. While you may think that Bankruptcy is your only way out, there are other options. There are several debt services available to Canadians.

Debt Relief Options Available to Canadians  

If you’re stressed out and losing sleep over the state of your debt, it’s time to speak to a Licensed Insolvency Trustee (LIT). An LIT can assist you in working through the different types of relief options and help you to determine which one is the right fit for you. 

Licensed Insolvency Trustees are familiar with all types of debt. In this podcast find out how they can help you.

Debt Consolidation

A debt consolidation loan is a personal loan that is used to pay off several smaller debts. For example, you may choose to take out a consolidation loan to pay off the balances on multiple high-interest credits.

The goal of debt consolidation is to make debt repayment as easy and manageable as possible. Rather than trying to juggle multiple creditors and remembering when to make each payment, debt consolidation helps to streamline the process with a single monthly loan payment. 

Of course, to take advantage of a low-interest consolidation loan, you will have to qualify. Even if you do qualify, it’s important to remember that by consolidating your debt you aren’t actually eliminating or reducing the total amount you owe. With a consolidation loan, you still have to repay your debt in full, plus interest. 

Credit Counselling

Credit counselling is another debt option you can consider. A credit counsellor will meet with you to discuss your financial situation and can provide information on how to deal with your debt. This can include tips on budgeting, the proper use of credit and debit, and how to set financial goals and priorities.

A credit counsellor can also develop a debt management plan. The debt management plan is a way of consolidating your debts. Your credit counsellor can contact your creditors on your behalf and ask them if they are willing to reduce or eliminate the interest rates on your debt. They can also ask your creditors to extend the timeframe for debt repayment. 

A debt management plan is not a legal process and your creditors do not have to accept the plan. Instead, a debt management plan is a voluntary agreement that is made between you, your counsellor, and your creditors. 

A word of caution. There are a variety of companies that offer consumer credit counselling services and many of them are paid a fee from the companies that you are indebted to. This even applies to some of the non profit credit counselling companies. In addition, many credit counselling companies will charge you a fee for debt management services. 

A Licensed Insolvency Trustee also provides debt counselling service and can walk you through the entire debt process. A LIT is restricted on what they can charge you for these services by the Bankruptcy and Insolvency Act. They also provide a free initial consultation and don’t charge any upfront fees.   

Debt Settlement 

A debt settlement company can help you to negotiate your debts with your creditors. The negotiation process involves offering your creditors a lump sum payment in return for the elimination of your debt. Typically, the amount of money proposed to your creditors is lower than what you owe. 

If your creditors agree to the settlement, then you will have to provide the lump sum amount to the debt settlement company who is then responsible for paying your creditors. It is up to your creditors whether or not they want to accept the settlement offer. 

Since there is no up-front agreement with your creditors, it is up to you to save up the lump-sum amount before the offer is made. Saving this amount of money while you are in debt can be extremely challenging and could take years to do. In this time, your creditors can take legal action to collect the money that you owe. 

It’s also important to be aware that some debt settlement companies charge high fees. And, even if the debt settlement is rejected, you may still be charged a fee by the settlement company. If this is the case, you could be left in a worse financial spot than when you started. 

Consumer Proposal 

A Consumer Proposal is a legally binding process that can only be administered by a Licensed Insolvency Trustee. 

In a Consumer Proposal, you will work with your Trustee to develop a debt repayment proposal that works for you and your creditors. In the proposal, you will offer to pay a certain percentage of your debt. You will not have to repay the entirety of your existing debts, unlike with a consolidation loan. The amount you pay will be determined by your specific circumstances including your income and assets. 

A Consumer Proposal generally results in monthly payments that are more affordable and sustainable. 

In your Consumer Proposal, you can also ask for a longer timeframe in which to pay your debts. However, a Consumer Proposal can not last more than five years. 

If your proposal is accepted, collection and wage garnishment will stop. You will make your Consumer Proposal payments to your Licensed Insolvency Trustee who is responsible for using the money to pay each of your creditors.

If your proposal is rejected, you have a few more options. You can make changes to your proposal and then resubmit, you can consider other debt service options or, you can declare Bankruptcy. 


Bankruptcy is a legal process that will eliminate most unsecured debt and give you the opportunity for a fresh financial start.

If you feel like Bankruptcy might be your best option, it is important that you speak with a Licensed Insolvency Trustee. A Trustee is a federally regulated professional who is qualified to help you to determine if Bankruptcy is the right choice and to help you through the process. 

If you and your Trustee determine that Bankruptcy is the best way to deal with your debt, then the Trustee will file the necessary paperwork to get the process started. Once the paperwork is filed, the collection phone calls will stop as will any wage garnishment. 

You are responsible for reporting your monthly financial situation to your Trustee. You are also required to attend two financial counselling sessions that are run by a Licensed Insolvency Trustee or a Licensed Credit Counselor. The purpose of these sessions is to help you understand what caused you to get to the point of Bankruptcy and the changes that you can make to better manage your money moving forward.

Speak to a Licensed Insolvency Trustees About Debt Services

There are pros and cons associated with all of the different debt service options. The right form of debt assistance is the solution that works best for you.

A Licensed Insolvency Trustee has the tools and expertise to guide you through the different debt solutions and help you to make an informed decision. You don’t have to deal with your debt alone. If you’re ready to get a handle on your finances, contact a Licensed Insolvency Trustee at Allan Marshall and Associates Inc. Give us a call today for a free consultation at 1 (888) 371-8900 or send us a message here.

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Mark Marshall BBA, C.I.R.P, L.I.T

Mark has been working in the Insolvency field since graduating from the University of New Brunswick with a degree in Business Administration (BBA). In 2012 Mark received his Chartered Insolvency & Restructuring Professional (CIRP) designation and attained his license as a Licensed Insolvency Trustee (LIT) in 2013.