Licensed Insolvency Trustees Explained: Your Guide to Debt Relief in Ontario

A Licensed Insolvency Trustee (LIT) is a federally regulated debt professional authorized by the Government of Canada to help individuals and businesses resolve serious financial problems. In Ontario, LITs are licensed under the Bankruptcy and Insolvency Act and are the only professionals legally allowed to administer insolvency proceedings such as consumer proposals, Division I proposals, and bankruptcy. This federal oversight ensures that every process is fair, transparent, and compliant with Canadian law.

Here’s the key: LITs take care of much more than just bankruptcy filings. They provide a range of debt relief solutions, financial counselling, and legal protection to help you regain control of your finances. They act as trusted advisors who guide you through all available debt relief options, helping you choose the solution that best fits your situation. From negotiating with creditors to stopping collection calls and wage garnishments, LITs provide legal protection and peace of mind during a stressful time. They also offer mandatory financial counselling sessions designed to help you rebuild healthy money habits and avoid future debt problems. Working with a LIT means you’re getting expert, regulated support. It’s not a quick fix; it’s a clear path to financial recovery.

What Can a Licensed Insolvency Trustee Do for You?

If you’ve never worked with a LIT before, you might wonder what their role involves. Here’s a clear breakdown:

1. Assess Your Financial Situation

The process starts with a free, confidential consultation. The trustee reviews your income, debts, assets, and expenses to understand your financial picture. This assessment determines whether you’re insolvent and what options are available. By taking a detailed look at your finances, the LIT ensures that any recommendation is realistic and tailored to your unique circumstances.

2. Explain All Your Options

A LIT doesn’t push you toward bankruptcy. They explain every legal debt relief solution. Here are some of the options offered:

• Consumer proposal – A formal agreement to repay a portion of your debt over up to five years.

• Division I proposal – For businesses or individuals with debts over $250,000.

• Bankruptcy – A last-resort option that eliminates most unsecured debts.

• Credit counselling – Budgeting and financial education to prevent future problems.

This step is crucial because it empowers you to make an informed decision rather than feeling pressured into one option.

3. Act as a Neutral Administrator

LITs are officers of the court, meaning they act impartially between you and your creditors. They file the necessary paperwork, negotiate with creditors, and ensure compliance with federal law. This impartial role helps protect your rights while ensuring creditors are treated fairly under Canadian insolvency regulations.

4. Stop Collection Calls and Legal Action

Once you file a consumer proposal or bankruptcy, creditors must stop all collection efforts, including wage garnishments and lawsuits. This legal protection is immediate. For many people, this relief from constant calls and threats is the first step toward regaining peace of mind.

5. Provide Financial Counselling

Two mandatory counselling sessions help you rebuild your financial habits and avoid future debt problems. These sessions cover budgeting, credit management, and strategies for long-term financial health, giving you the tools to succeed after your insolvency process ends.

Why Work with a Licensed Insolvency Trustee in Ontario?

Here’s why choosing a LIT, especially a trusted firm like D. & A. MacLeod Company Ltd., is the safest and smartest move:

Federally Regulated & Ethical

LITs follow strict federal standards and a code of ethics. Fees are regulated by the government, and most trustees offer free initial consultations.

Comprehensive Solutions

Unlike debt settlement companies or credit counsellors, LITs can provide legal protection and administer government-approved programs.

Local Expertise

D. & A. MacLeod Company Ltd. has been serving Ontario communities for over 70 years, with offices across Eastern Ontario. They understand local laws and creditor practices.

Trusted Reputation

BBB-accredited with an A+ rating, D. & A. MacLeod Company Ltd. is known for compassionate, personalized service that helps individuals and businesses regain financial stability.

Common Misconceptions about LITs

• “They only handle bankruptcy.”

  
  

  False. Consumer proposals are often the preferred solution because they let you keep your assets and reduce debt without declaring bankruptcy.

• “It will ruin my credit forever.”

  
  

  Not true. While insolvency affects your credit, most people start rebuilding within months. Consumer proposals typically have a shorter recovery time than bankruptcy.

• “I can negotiate with creditors myself.”

  
  

  Possible, but risky. LITs provide legal protection and ensure creditors comply with the law.

  
  

Debt Relief Options Explained

Consumer Proposal

• Reduces unsecured debt by up to 80%.

• Stops interest and collection calls.

• Lets you keep your home, car, and RRSPs.

• Payments spread over up to five years.

  
  

Bankruptcy

• Eliminates most unsecured debts.

• Typically lasts 9–21 months for first-time filers.

• Includes exemptions for certain assets under Ontario law.

  
  

Division I Proposal

• For businesses or individuals with debts over $250,000.

• Allows restructuring without bankruptcy.
  

FAQ

1.     Is a trustee the same as a bankruptcy lawyer?

No. A Licensed Insolvency Trustee is not a lawyer. They are federally regulated professionals authorized to administer insolvency proceedings. You don’t need a lawyer to file a consumer proposal or bankruptcy in Canada.

2.     How much does it cost to work with a LIT?

Fees are set by federal regulation and are included in your repayment plan. There are no hidden charges, and your initial consultation is free.

3.     Will I lose my home or car?

Not necessarily. In many cases, you can keep your home and vehicle if you maintain payments and file a consumer proposal instead of bankruptcy.

How to Get Started

If you’re overwhelmed by debt, the first step is simple: book a free consultation with a Licensed Insolvency Trustee at D. & A. MacLeod Company Ltd.

A Licensed Insolvency Trustee is your trusted, federally regulated debt advisor. They offer more than bankruptcy. They provide tailored solutions like consumer proposals and financial counselling to help you regain control. If you’re in Ontario and struggling with debt, working with a LIT ensures you get legal protection, expert advice, and a fresh start.

Ready to take control? Call us today.

Find a location near you: our offices.