Superintendent of bankruptcy changes designation to licensed insolvency trustee.

Posted By: J. Doug Hoyes

Individuals able to provide debt relief services under the Bankruptcy & Insolvency Act (BIA) in Canada are licensed by the federal government through the Office of the Superintendent of Bankruptcy (OSB). In December of 2015, the OSB announced a significant change in the designation of these professionals from Trustee in Bankruptcy to Licensed Insolvency Trustee or LIT. This change takes place effective April 1, 2016, although firms and individuals may choose to use the new designation immediately if they notify the OSB of their intention to do so in writing.

The OSB has been reviewing trustee advertising and designation directives for some time. The primary reason was to reduce the amount of confusion for consumers as to who was licensed to provide the full range of debt restructuring services available to consumers under the BIA. Those services include not only personal bankruptcy, but also a debt settlement option called a consumer proposal. Currently, almost half of all insolvency filings in Canada by individuals are a consumer proposal.

The use of the title Bankruptcy Trustee made it hard for consumers to understand that only licensed Bankruptcy Trustees could file a consumer proposal. Adding to the confusion, trustees were also able to call themselves Consumer Proposal Administrators under the BIA. In addition, many unlicensed debt consultants advertise 'government' debt settlement programs, which are really consumer proposals, despite the fact that these debt advisors are not licensed to provide these services. These debt consultants can, in fact, only refer their prospective client to a licensed trustee (now LIT) to file a...