As living expenses rise faster than income, many Canadians are facing a heavy consumer debt load. Choosing a debt advisor is an important step in debt recovery. The market is flooded with unlicensed and unregulated ‘debt consultants’ who charge a fee and then refer debtors to a Licensed Insolvency Trustee.
In this podcast Licensed Insolvency Trustee, Derek Chase, explains in detail who these professionals are and what they do. Other topics cover are:
- Licensed Insolvency Trustees qualifications and education
- Who protects the integrity of the insolvency process
- What a Bankruptcy lawyer does and the terms Chapter 7 and Chapter 11
- Financial Advisors and quality control of their industry
- How to prepare for your first meeting with a Licensed Insolvency Trustee and what to expect.
Licensed Insolvency Trustees are federally regulated and approved by the Canadian government. They are the ones that will give you honest advice about all the options available to you. This podcast will help give you the confidence that you are choosing the right debt professional.
Read the Transcript
Wayne Kay 0:04
Welcome to the Debt Matters podcast where we help Canadians find solutions to their debts with Licensed Insolvency Trustees from across Canada. And that’s actually what we’re going to dive into. For today’s topic we’re going to learn all about what a Licensed Insolvency Trustee is. We’re going to learn about the difference between an LIT and a Bankruptcy lawyer and a financial advisor and how it works right across the country.
To tell me all about this, I’ve got Derrick Chase joining me from Derek Chase and Associates Licensed Insolvency Trustee in BC. He’s from Campbell River. Derek, thank you very much for being on the show today.
Derek Chase 0:39
Oh, hi, Wayne. You’re welcome. I’m really looking forward to it.
Wayne Kay 0:41
It’s always good because we like to answer these questions. Maybe we use terms sometimes on the show that a lot of people maybe don’t even understand. We say Licensed Insolvency Trustee – we throw this around a lot, but let’s explain what a Licensed Insolvency Trustee is.
Derek Chase 0:59
It’s something that you don’t hear about a lot and then you see it and you wonder what’s going on there. A Licensed Insolvency Trustee is an individual that’s been licensed by the federal government and given the authority to look into, either a person or a company’s finances, and help them restructure those finances through possibly a proposal or a Consumer Proposal.
We do have the authority, the only ones in Canada, to administer a Consumer Proposal or Bankruptcy filing. And we’re also required to be involved with receiverships, which are settings where usually a lender is taking control of a company.
It’s a formal licensing, it’s a way to ensure that the integrity of the federal law is maintained. And it works. Well and what’s interesting is that there’s not a lot of trustees – Licensed Insolvency Trustees in Canada. It is my understanding that there’s approximately 1000. And when you think about a country of 35 million, that’s not a lot.
Wayne Kay 2:12
Wow. So how do you go about becoming an LIT?
Derek Chase 2:16
Well, it is a rigorous process to become a Licensed Insolvency Trustee, the vast majority of LIT’s have an accounting background. And it’s my understanding that that’s the case. There are LIT’s that don’t have a formal accounting background and were able to qualify based on their different experiences in life, such as being a lawyer or other avenues.
But the majority are formally trained as an accountant – which dialing it back even further means that LIT’s would firstly have a university degree and then likely have become a Chartered Professional Accountant, a CPA. And at that stage, you’re able to start gaining experience about the world of insolvency. And if you decide to go forward to get your license as an insolvency trustee, it takes approximately three years from that point to go through the different courses which you’re doing while you’re working.
I was just looking back on that with my wife the other day and thinking, wow, I was studying and working and we had these little kids running around. And you know, it was a busy time in life for sure.
But the fun part, Wayne is once you do your written exams, then you get to go in front of an oral board exam. And that’s a hard pounder, because you’ve got three or four people that know their business, sitting in front of you asking you very tough questions. And you can’t, you can’t sort of bluff your way around it. You have to come up with the real deal as far as an answer goes. And so you go through that oral board and once you’ve done that and had a certain amount of experience, you are granted a license by the federal government.
Wayne Kay 4:20
And it is all regulated, as you said, through the federal government. This is like a rigorous routine to become a Licensed Insolvency Trustee. It’s a lot of work.
Derek Chase 4:31
It is for sure. But like anything in life, good things come from what you work at. And it’s a rewarding job. Believe it or not, you see a lot of lives change for the better. It’s not just doom and gloom. It’s more like – here’s a pathway you can go either personally or with your company to get to a better place and it’s very much more hopeful than you think.
Wayne Kay 4:58
Doing these interviews with so many Licensed Insolvency Trustees – I think it’s wonderful and I didn’t really understand that world. I’d heard of Bankruptcies before back many, many years ago, but never about Consumer Proposals, and really didn’t understand exactly what a Licensed Insolvency Trustee is.
Then when I found out I was like, well, the world needs to know. The information you’re giving is so different. You’re not dealing with people in an alley with a trench coat going pssst…you’re in financial trouble here – let me help you out if you want to get some more money. This is regulated right from the federal government to help people get out of very bad situations.
Derek Chase 5:45
Yes, and the department of the federal government that oversees trustees operations – their motto is to protect the integrity of the insolvency system in Canada. So I think the public should know that. Canadians should know that it’s a good system. It’s well respected internationally. And I think it’s a good fair system that we have in Canada.
Wayne Kay 6:10
Do other countries have this kind of system?
Derek Chase 6:13
Not exactly. Most advanced economies have some type of insolvency system, but there’s always different nuances. I hear some times of people making reference to Chapter 7 or Chapter 11. These are references for the American system. And the American insolvency system is much more lawyer driven. It’s just different. It’s not bad. It’s just different.
Wayne Kay 6:42
So when you hear Bankruptcy, somebody’s going into Bankruptcy as a person or as a business – do either or both have to work with a Licensed Insolvency Trustee?
Derek Chase 6:55
Certainly in Canada, yes, for sure. A Licensed Insolvency Trustee is the only one that can register a Bankruptcy. And so you have to have the service of a Licensed Insolvency Trustee to register a Bankruptcy in Canada.
Wayne Kay 7:11
And where does a Bankruptcy lawyer fit in?
Derek Chase 7:16
You know, in larger settings or complicated settings – there’s often lawyers that are involved that would call themselves an insolvency lawyer or a bankruptcy lawyer. And they are lawyers. They are very well versed in the difference and various acts or laws that relate to insolvency.
So just based on their experience and their knowledge of those different statutes, they would hold themselves out as Bankruptcy lawyers or insolvency lawyers. They would be often working in conjunction with a LIT on a larger file. But they are distinctly different from a Licensed Insolvency Trustee.
Wayne Kay 8:04
And then we have the world of financial advisors. What’s the difference between that and LITs and lawyers?
Derek Chase 8:14
It’s a good question. You know, when I see a financial advisor, my thoughts immediately go to someone that’s helping a person invest some money. But there are other financial advisors that are willing to give advice in regards to debt situations. And because it’s such a broad phrase, it’s very difficult to have confidence, I guess, in what sort of advice you’re getting there.
I don’t think there’s any regulation in place out there that would prevent you from saying, Hey, I’m a financial advisor. Go ahead, hang out a shingle and say that you are a financial advisor, and see how that goes. Because, more than likely either some trained accountant or LIT or lawyers is going to have to clean up the mess.
So it’s a very broad, sort of loose label that would say that someone can give you some advice with finances. But for a financial advisor – I guess you’re just not quite sure about the quality control there. You don’t really know what sort of quality advice you’re getting.
Whereas when you’re talking to an LIT or a lawyer, or a CPA, there’s this rigorous training that I mentioned that gives you that confidence that you’re dealing with some quality advice.
Wayne Kay 9:45
Would you recommend this career to others to become an LIT?
Derek Chase 9:50
Yes, for sure I would. It’s an interesting day. You’re always doing something different it seems. As I mentioned, you’re able to see people change. And you know, some people are extremely thankful.
As with any occupation, I think there’s always good days and bad days. But for the most part, I think it’s a very rewarding, very rewarding area to practice in. And it seems because of the modest amount of Trustees across the country, I think there will always be turnover there. So it would be would be a good job to have to go for, I think.
Wayne Kay 10:33
It’s interesting, because it just helps us with understanding when you are offering advice, regarding these debts that happened to people – when we talk about this all the time. It’s not really of any fault of their own. Somebody could argue that, yea it is, but not really. You can go along, and all of a sudden, an illness comes along, or a pandemic and who expected this to go on for two years. And all of a sudden, everything goes sideways with your finances, and we’re probably going to see a fair amount of Bankruptcies or proposals in the next year.
Derek Chase 11:08
And that’s possible. There’s been people saying that ever since the pandemic started. It hasn’t been the case, but you never know what the future holds. It’s good to know that there’s quality people available to provide information.
And I would never discourage someone from talking to a lawyer – that’s a perfectly fine thing to do. And my colleagues across Canada and myself, the vast majority of us offer a free initial consultation. We’ll take 30 minutes and go through your setting and give you some feedback on that. I think that’s very valuable. So it’s, there’s information and there are solutions out there, if you feel that you’re getting hemmed in with your debts.
Wayne Kay 11:53
So if I’m going to do a 30 minute consultation, what’s the best way for me to prepare before I show up?
Derek Chase 12:00
That’s a good question. I think we would have a more productive meeting, if you came in to talk to me, and you had a list of your debts along with the rough amount of what’s going on with them.
If you had a list of your assets and specifically, if you had a pretty good idea what your monthly budget is. Those are three key pieces that we like to know about, in order to give you the appropriate feedback. And if you had that ahead of time, it would be a good meeting.
Wayne Kay 12:36
All right, and then often solutions will come out of this. What do you find typically, after that 30 minutes, what happens?
Derek Chase 12:43
Sometimes people have to go and find out a little bit more information. Sometimes they can see right away, what’s the right option. Sometimes it’s just having an independent voice tell them something that they might have thought for themselves already. And they just needed to hear it from someone else’s viewpoint.
So it’s okay, it can go a lot of different ways. But without having that confirmation or that information from the meeting, you’re very much still just sort of wandering around and in a spot where you ‘re finding it difficult to make a decision.
Wayne Kay 13:19
Yes. It’s always harder when you don’t know. Speculating on what could happen is way worse than actually having a written down. And knowing specifically, this is the situation I’m in and this is what I need to do to get out of it. Or here’s three options for me to get out of it. It makes all the difference for sleeping at night.
Derek Chase 13:40
Oh, for sure. Yes, I would agree with that. And there’s so many different situations that we see that it’s hard for me to generalize the outcome of that meeting. But I can only tell you – that I’d say that I would make a generalization to say that it’s probably a statement along the lines of, Oh my gosh, I wish I would have talked to you six months ago or a year ago. And not have had to have these sleepless nights so often. So it’s good info, for sure.
Wayne Kay 14:15
Derek, this is fascinating. Thanks for taking us into the world of a Licensed Insolvency Trustee today. Anything else you’d like to add?
Derek Chase 14:23
No, I don’t think so. Wayne, it was a good chat. And I’m glad I can proudly say I’m a Licensed Insolvency Trustee and my colleagues, I know, are good people. So it’s a good sector of our financial world.
Wayne Kay 14:38
Terrific. Derek, thanks very much.
Derek Chase 14:39
You’re welcome. Thanks for having me.
Wayne Kay 14:42
Derek Chase was my guest today, Licensed Insolvency Trustee. As you know, since we’ve been talking about this – to schedule a free consultation with Derek or his team, go to bankruptcytrusteebc.ca.
And that’s it for today’s Debt Matters podcast. Make sure you subscribe, wherever you get your favorite podcasts from. And of course, for more information – if you want to find out about budgeting, well, we’ve got a podcast for that. So just search it out on our podcast directory, debtmatters.ca. I’m Wayne, thank you very much for listening.
About Derek Chase
Derek Chase is a Licensed Insolvency Trustee in British Columbia. He has been helping individuals and corporations restructure their debt since 1997. His areas of practice include personal and corporate insolvency including Consumer Proposals and Bankruptcy. The best part of his work is to be able to witness lives change for the better when the heavy burden of unmanageable debt is lifted.