A bankruptcy trustee is a licensed debt relief specialist specially trained to administer proposals and bankruptcies.
Many people think the only thing bankruptcy trustees do is handle business and personal bankruptcy filings. In actuality, Canadian law mandates the first responsibility of the trustees is to counsel everyone who comes to see them on all available solutions to their debt problems.
Preparing to Become a Bankruptcy Trustee
It’s not easy to become a bankruptcy trustee. The Office of the Superintendent of Bankruptcy oversees the licensing of trustees and mandates coursework, examinations, and character requirements. Interested persons must:
- Possess a university diploma or have 5 years of related experience
- Successfully complete course work designed by the Canadian Association of Insolvency and Restructuring Professional (CAIRP)
- Pass tests administered by the CAIRP
- Possess an excellent personal reputation
- Maintain high personal finance standards
Bankruptcy Trustee Qualifications
Trustees are required to go through extensive training in order to become licensed.
Most prospective trustees already have a background in finance. They pursue further coursework through programs administered by an organization of certified bankruptcy trustees. Aspiring bankruptcy trustees must complete two programs before they begin the examination process.
Written and oral examinations help the Office of the Superintendent determine the qualifications and suitability of each prospective trustee. Knowledge and character are equally important factors in determining the success of the applicant.
Why consult a bankruptcy trustee?
Bankruptcy trustees are qualified to assist individuals and families who are struggling with unmanageable debt. Most trustees hold accounting degrees and all have completed three years of specialized bankruptcy and legal training. Bankruptcy trustees are familiar with both the federal and provincial laws concerning debt relief and can help you determine which of the many available options best suits your financial situation. In addition, trustees are held to the highest code of ethics ethics. Trustee fees are government regulated. You know you’re working with someone you can trust.
What debt relief options will the bankruptcy trustee offer?
Bankruptcy and consumer proposals are the most common legally sanctioned methods of debt relief available in Canada. Both are regulated by the Bankruptcy and Insolvency Act (BIA).
After a thorough examination of your personal finances and a discussion concerning your personal circumstances, a bankruptcy trustee can suggest options for your consideration. Bankruptcies and consumer proposals are the last line of defense for those who can no longer afford to pay their debts or whose creditors are threatening legal action.
What does a bankruptcy trustee do?
Bankruptcy trustees perform a wide variety of functions that aid those seeking relief from heavy debt loads. A bankruptcy trustee can assist you by:
- Assessing your financial situation
- Determining the amount of your indebtedness
- Providing financial counsel
- Suggesting possible courses of action
- Negotiating with creditors
- Drawing up necessary paperwork for a bankruptcy or consumer proposal filing
- Receiving and liquidating the assets of the bankrupt
- Assisting in the discharge of the bankrupt
The bankruptcy trustee works to protect both the creditor and debtor’s rights during a bankruptcy. While the trustee ensures your bankruptcy is handled fairly and efficiently, he or she is also concerned with recovering money for the creditor.
Financial counseling and advice. Perhaps one of the most valuable services a bankruptcy trustee provides is that of financial counselor. The trustee will sit down with you before filing the bankruptcy and get a clear picture of your financial situation to help you find out if there are options other than bankruptcy, such as a consumer proposal or payment plans with creditors.
If you do go through a bankruptcy, the law requires that you attend two counseling sessions with your trustee. The first is held within the first few months after your filing. Your bankruptcy trustee will teach you good money management skills and help you learn to avoid future debt problems. You will also receive advice on rebuilding your credit and personal financial health.
Meeting With a Bankruptcy Trustee
Meeting with a bankruptcy trustee is the first step in the bankruptcy process. Your bankruptcy trustee will examine your finances and offer possible solutions to your financial problems.
If you are consulting with a bankruptcy trustee, you should bring the following documents to your first meeting:
- Personal identification documents including birth and marriage certificates
- Personal bank statements
- Bills and notices from creditors
- If you are employed, proof of employment and pay stubs
- Tax documents
- A complete list of creditors and their contact information
- Pertinent legal documents such as a divorce decree or garnishment
Be sure to write down any questions before your meeting with the trustee. Take careful notes during your consultation.
Speak to a Trustee Early
It’s best to take advantage of a trustee’s free advice early on. You might be able to avoid bankruptcy. Trustees are well qualified to work with you to develop a personal budget. In some cases, this alone is enough to allow sufficient cost cutting to get out of debt over time.
In more serious situations, trustees offer an alternative to bankruptcy called a consumer proposal. A proposal allows you to pay back a substantially reduced portion of your debt over a five year time period.
If you are in financial trouble, you have nothing to lose and everything to gain by taking advantage of the free advice offered by bankruptcy trustees.
How can I find a bankruptcy trustee?
Personal Bankruptcy Canada maintains a network of trusted bankruptcy trustees from coast to coast. In addition, the OSB also maintains a complete list of trustees by province.