Questions to Ask Your Bankruptcy Trustee Before You Start the Process

Is bankruptcy looking more and more likely for you? If so, you’ve probably got plenty of questions on your mind. Working with a bankruptcy trustee can help put your mind at ease.

Bankruptcy trustees, a casual term for Licensed Insolvency Trustees, are among the most highly educated debt consultants around. They’re dedicated to helping their clients navigate debt management challenges and offer a variety of debt relief options beyond bankruptcy.

Trustees help you file for bankruptcy or a consumer proposal. They also administer your bankruptcy under the Bankruptcy and Insolvency Act and manage your assets held in trust.

Not sure where to start with an experienced and dedicated bankruptcy trustee in Ottawa? We’ve put together a few  questions to ask and tips to consider.

But first:

What Is the Role of A Bankruptcy Trustee?

A bankruptcy trustee is a qualified debt advisor who is also licensed by the Canadian government to administer your bankruptcy or consumer proposal.

Bankruptcy trustees are, in fact, Licensed Insolvency Trustees in Canada. They help you understand your options, and advise you on the best course of action based on your financial situation.

A bankruptcy expert will also prepare paperwork for your case and complete the bankruptcy or consumer proposal process.

Bankruptcy trustees have the responsibility to:

• Meet with you to evaluate your debt and situation, and to notify you of all the available alternative options you have.
• Prepare official paperwork and meet with you to look over it before you sign it and answer any more questions. Once signed, the trustee will file the bankruptcy forms electronically with the Office of the Superintendent of Bankruptcy. After the forms are filed, the bankruptcy process begins, and you will have bankruptcy protection.
• Contact your creditors to notify them of your bankruptcy protection; mail them documentation so they will stop calling you, and begin the settlement of claims or negotiations for your consumer proposal.
• Review claims, sell your assets that are not exempt from the seizure and administer the bankruptcy from start to finish.
• Make sure you complete all the requirements of your bankruptcy, including the credit counselling sessions.
• Apply for your discharge to eliminate your debts.

To ensure a bankruptcy trustee has the experience and dedication to complete these responsibilities, ask the following questions to help you decide on the right trustee.

Question 1: Are You A Licensed Insolvency Trustee?

Only Licensed Insolvency Trustees (LITs) can protect you under bankruptcy law in Canada. If the person you are dealing with is not licensed by the federal government, then they are not legally an insolvency trustee.

There are many debt management companies out there that claim to offer advice but lack the authority of a Licensed Insolvency Trustee to enact meaningful and immediate action backed by legislation. In some cases, they’ll even charge you a referral fee just to send you to a LIT.

Question 2: What Should I Bring to My Consultation?

To find the best debt management option for you, a trustee should ask you to bring all your financial documents to review. Your trustee will need information about all your debts, bills, income, and assets. Examples of these documents include pay stubs, tax returns, credit card bills, and bank statements.

They may also ask you to bring identification. If they don’t ask that you bring your financial information, then you may be wasting your time at your initial meeting.

Question 3: What Are My Options?

As mentioned before, it is the responsibility of your trustee to advise you of all your debt relief options based on your situation. This is actually a legal responsibility, so they will ask you a series of questions about your financial situation to better advise you of your options.

Question 4: How Much Will This Cost Me?

The fees associated with bankruptcy are not your typical service costs. LITs are paid for their services through the monthly fees you pay as part of the bankruptcy process, not as a separate monthly payment.

That said, bankruptcy may have other costs in the form of payments or assets you may give up as part of the bankruptcy process. Your trustee will discuss all potential costs and fees with you prior to filing a claim for personal bankruptcy.

Question 5: What Is My Best Option?

This is an important question to ask! The best option to appropriately address your debt challenges depends on your circumstances. Whether you choose personal bankruptcy or a consumer proposal depends on your financial situation and is, ultimately, a personal choice.

A bankruptcy trustee will help you navigate the pros and cons of both, and offer an honest financial assessment to help you make an informed decision. In fact, trustees have an obligation to advise you of all your options. Only then can they help you decide which direction you should go in.

Question 6: What’s the Process and Where Do We Start?

This largely depends, again, on the option you choose. Once you make a decision, though, it all begins with paperwork filed by your bankruptcy trustee.

Once that paperwork is filed, you’ve started! You’ll notice an immediate halt to debt collection actions, and all interest accumulating on your debts will immediately freeze.

From there, your trustee will develop your own personalized plan and will help you develop better money management skills and habits.

Why It’s Important to Feel Comfortable with The Bankruptcy Trustee You Choose

Filing for a consumer proposal or bankruptcy in Ottawa can be a lengthy and stressful process. And the last thing you want is to make it more stressful by working with someone you don’t feel comfortable with.

Make sure to ask as many questions as you need to (including the ones mentioned above) to ensure you find an experienced and dedicated trustee who you trust to get the job done properly.

If you’re comfortable with your trustee, you can ease your stress and start the path to debt relief while in good hands.