How to Choose a Licensed Insolvency Trustee — 7 Things to Check

TL;DR

A Licensed Insolvency Trustee (LIT) is the only professional in Canada legally authorized to administer consumer proposals and bankruptcies under the Bankruptcy and Insolvency Act. Before choosing one, verify their licence on the OSB register, ask about fee transparency, check their communication approach, and consult at least two or three. Initial consultations are always free.

1. Verify Their Licence on the OSB Register

This is the single most important step. Licensed Insolvency Trustees are federally regulated by the Office of the Superintendent of Bankruptcy (OSB). Every legitimate LIT appears in the OSB's public register, searchable by name and location.

If someone advertises debt relief services but is not listed as a Licensed Insolvency Trustee on the OSB register, they cannot legally file a consumer proposal or bankruptcy on your behalf. Some unlicensed "debt consultants" charge hefty upfront fees and then refer you to an LIT anyway — meaning you pay twice.

How to check: Visit the Innovation, Science and Economic Development Canada website and search the register of Licensed Insolvency Trustees. You can also call the OSB directly.

2. Ask About Fee Transparency

A trustworthy LIT will explain their fee structure clearly during the initial consultation. For both consumer proposals and bankruptcies, the fees are governed by the BIA tariff — they come from within the payments you make, not as separate charges.

Red flags to watch for:

• Any request for upfront fees before filing
• Vague or evasive answers about costs
• Pressure to sign before you understand the total cost
• Claims that their fees are "special" or "discounted" compared to other LITs

The fees are standardized by regulation. While the total you pay in a consumer proposal varies based on your offer to creditors, the LIT's compensation formula is the same across all trustees.

3. Evaluate Their Communication Style

You will be working with your LIT for months — potentially years if you file a consumer proposal. Communication style matters. During the initial consultation, pay attention to:

• Do they listen to your situation before recommending a solution?
• Do they explain all available options, including alternatives to their services?
• Are they patient with your questions?
• Do they use plain language rather than jargon?
• Do they pressure you to make a decision immediately?

An LIT who pushes you toward a specific solution before fully understanding your situation is not acting in your best interest. Under the BIA, trustees have a duty to explain all options — not just the most profitable one.

4. Check Reviews and References

Look for reviews from past clients on Google, the Better Business Bureau, and other platforms. While individual experiences vary, consistent patterns can tell you a lot. Pay attention to comments about:

• Responsiveness and communication
• Clarity of explanations
• Follow-through on commitments
• Staff professionalism
• How they handle problems or changes in circumstances

You can also ask the LIT if they can provide references from former clients. While privacy considerations may limit this, some trustees have testimonials or case studies available.

5. Consider Location and Accessibility

While many LIT consultations now happen virtually, consider whether in-person meetings are important to you. If you prefer face-to-face interactions, choose a trustee with an office that is convenient to reach.

Also consider:

• Availability for evening or weekend appointments
• Virtual consultation options
• Whether the same person handles your file throughout or if you are passed between staff
• Languages spoken (important in bilingual regions)

6. Ask About Their Experience with Your Type of Debt

Not all debt situations are the same. If you have complex circumstances — such as small business debts, CRA arrears, or debts in multiple provinces — ask the LIT about their experience with similar cases.

Some LITs specialize in consumer files, while others focus on corporate insolvency. You want someone whose practice is aligned with your needs. Questions to ask:

• How many consumer proposals or bankruptcies do they file per year?
• Have they handled cases involving CRA debt, student loans, or joint debts?
• What is their typical acceptance rate for consumer proposals?

7. Trust Your Instincts

After meeting with two or three Licensed Insolvency Trustees, you will likely have a sense of who you feel most comfortable with. Trust that instinct. This is a person who will be managing a significant financial process on your behalf, and you need to feel confident in their competence and integrity.

If something feels off — pressure tactics, evasive answers, or a lack of genuine interest in your situation — move on. There are hundreds of Licensed Insolvency Trustees across Canada, and you deserve one who treats you with respect.

Take our debt relief quiz if you are not sure which debt relief option to explore first, and browse our provider directory to find Licensed Insolvency Trustees in your area.

FAQ

What is the difference between a Licensed Insolvency Trustee and a debt consultant? A Licensed Insolvency Trustee is federally licenced and regulated by the OSB. They are the only professionals who can legally file consumer proposals and bankruptcies under the BIA. A "debt consultant" has no federal licensing requirement and cannot file insolvency documents. Some consultants charge fees to refer you to an LIT — an unnecessary cost.

Can I switch LITs after I have started? Yes, but it can be complicated. If you have already filed a consumer proposal or bankruptcy, transferring your file to a different LIT is possible but requires court approval and may involve additional costs. It is much better to choose the right trustee from the start.

Are all LIT consultations free? The initial consultation is always free. This is a regulatory expectation. Subsequent meetings during the process are part of the trustee's duties and are covered by the fees within your consumer proposal or bankruptcy payments.

What should I bring to my first meeting with an LIT? Bring a list of your debts (creditor names and approximate amounts), recent pay stubs or proof of income, a summary of your monthly expenses, and details of any assets (property, vehicles, investments). The more information you provide, the more accurate the LIT's assessment will be.

Sources

• Office of the Superintendent of Bankruptcy — Register of LITs
• Canadian Association of Insolvency and Restructuring Professionals (CAIRP)
• Bankruptcy and Insolvency Act (BIA), R.S.C., 1985, c. B-3