What Is a Licensed Insolvency Trustee?

Why Might You Need a Trustee?

If you’re buried in debt, dodging collection calls, and Googling “debt help,” you’ve probably come across the term Licensed Insolvency Trustee—aka LIT.

Maybe it sounds serious. Maybe it sounds scary. But here’s the deal: LITs aren’t scary. They’re one of the few people in Canada actually equipped to help you get your financial life back on track—legally, and for real.

Let’s break it down.

What Is a Licensed Insolvency Trustee, Really?

LITs Are the Only People Legally Authorized to File a Consumer Proposal or Bankruptcy in Canada

Let’s be crystal clear: only a Licensed Insolvency Trustee (LIT) can help you:

File a consumer proposal to reduce and restructure your debt, or
File for bankruptcy when you’ve got no path forward.

They’re licensed and regulated by the Office of the Superintendent of Bankruptcy (OSB)—a federal government body. So this isn’t some private business trying to sell you a product. These folks have legal authority and strict accountability.

Think of Them as Financial Mediators With Legal Power

They don’t work for you, and they don’t work for your creditors. They’re neutral. Their job is to:

Assess your finances
Make sure the process is fair to both sides
Carry out the legal duties of a proposal or bankruptcy

They’re part accountant, part lawyer, part debt strategist—and they’re trained to help you get results without judgment.

What Can a Licensed Insolvency Trustee Actually Do?

Administer a Consumer Proposal

This is a powerful legal tool—and it’s often misunderstood.

A consumer proposal is a formal agreement between you and your creditors to:

Repay a portion of your debt
Freeze all future interest
Consolidate everything into one monthly payment, often for 20–30% of the total

The best part? You could all your assets including your house, ,your car and your dignity.

The LIT handles all the negotiations, paperwork, and payments.

Help You File for Bankruptcy (If Needed)

Bankruptcy is not the end. Sometimes, it’s the reset button you need.

If your income is low and your debt is sky-high, bankruptcy may wipe the slate clean and give you breathing room. It also:

Stops lawsuits and garnishments
Erases most unsecured debts
Gives you a fresh start in as little as 9 months (in many cases)

The LIT guides you through every step.

Offer a Free, Legally Mandated Debt Assessment

Yes—it’s free. By law, Licensed Insolvency Trustees are required to offer a no-cost, no-obligation consultation.

In that meeting, they’ll:

Go through your finances
Explain every legal option
Give you a clear idea of what’s next

No gimmicks. No pressure. Just the facts.

LITs vs. Everyone Else: Who’s Legit and Who’s Just Talking?

Debt Consultants = Red Flag

Some companies charge you $1,000–$3,000 upfront just to “refer” you to a LIT or “help you prepare a proposal.” Guess what?

They can’t legally file anything
They have no government oversight
They often leave clients worse off—broke, confused, and out thousands of dollars

Only a Licensed Insolvency Trustee can do the real work.

Credit Counsellors: Helpful, But Not the Same

Credit counselling agencies run Debt Management Plans (DMPs)—which can be great for people who just need to stop interest and catch up on payments.

But:

They can’t reduce your principal
They can’t stop legal action
They aren’t regulated the same way LITs are

If your debt is manageable and your credit is still solid, credit counselling could help. But if things have gone off the rails, you need an LIT.

How LITs Fit Into Your Mortgage and Debt Strategy

When Mortgage Consolidation Isn’t Enough

At Mortgage Brain, we love a smart mortgage refinance. But let’s be honest: it’s not always enough.

If you don’t have enough equity
If your income is stretched too thin
If your credit has already tanked

Refinancing isn’t going to save you. That’s when it’s time to look at legal debt solutions like a proposal or bankruptcy.

Working With a Mortgage Broker Who Understands Both Sides = Game-Changer

We don’t just refer you to an LIT and walk away.

We’ve worked inside insolvency practices. We’ve negotiated thousands of proposals. We know when to pull that trigger, and when to find another route.

You get a strategy—not just a loan pitch.

What to Expect If You Meet With a Licensed Insolvency Trustee

Free. Confidential. Judgment-Free.

Your first meeting with an LIT won’t cost a thing. And they’re not there to judge you—they’re there to help.

They’ll look at:

What you owe
What you earn
What you own
What you want to achieve

Then they’ll walk you through every legal option available.

Filing Comes With Responsibilities (But Nothing You Can’t Handle)

If you file a consumer proposal or bankruptcy, you’ll be required to:

Make monthly payments
Attend two financial counselling sessions
Report your income monthly (in bankruptcy cases)

It’s structured. It’s predictable. And you’ll be on a clear path to recovery.

Final Thoughts: Don’t Fear the LIT. Fear Bad Advice.

Licensed Insolvency Trustees are not your enemy. They’re a legal lifeline when debt gets out of control.

What you should fear?

High-interest consolidation loans you can’t afford
Debt consultants charging you thousands for nothing
Advice from people who don’t know insolvency law—and don’t care to learn

If you’re struggling with debt and unsure where to turn, talk to someone who actually knows what they’re doing.

Ready to Take Control of Your Debt?

At Mortgage Brain, we know how to play the full financial chessboard.

Whether your best move is a refinance, a proposal, or a mix of both—we’ll find it. No fluff. No guesswork. Just solutions.

Let’s build your comeback plan. Reach out today. We’ll point you in the right direction—even if that means talking to a Licensed Insolvency Trustee.