How Licensed Insolvency Trustees Help Resolve Debt-Related Problems in Canada

Once famously frugal, Canadians have become a lot more open to consumer credit and borrowing. That can be a positive development, as when a loan allows a responsible borrower to buy a home or afford an education that would otherwise be out of reach.

Unfortunately, many Canadian citizens each year end up accumulating debts they can no longer keep up with. When such financial problems reach critical levels, there are a couple of ways of resolving them that are defined and endorsed by the federal government. For many residents of Calgary Licensed Insolvency Trustees play crucial roles in resolving their financial troubles for good.

Debt Problems Can Turn Messy Quite Quickly

Once a consumer defaults on one or more debts, what might have formerly been genial relationships typically turn adversarial. Most lenders are happiest to collect interest from borrowers who are well-positioned to keep up with their obligations.

When that situation no longer prevails, creditors and debtors end up with conflicting interests. A bank or other lender will always want to do everything possible to minimize its losses once it becomes apparent that a debt will not be repaid as had been agreed.

Financially distressed debtors, on the other hand, inevitably find themselves struggling to allocate their limited resources as effectively as possible. When two or more creditors are aggressively insisting on repayment, it can start to feel like a virtual war was being waged.

A Licensed, Qualified Third Party to Oversee the Process of Eliminating Debts

Because such problems are so common, legislators in Canada have seen fit to provide solutions. One especially important tactic is the legally required appointment of a licensed trustee to help resolve debt-related problems.

After a debtor in Canada files for bankruptcy or requests the consideration of a consumer’s proposal, a licensed trustee will be put in charge of the process. In the case of bankruptcy, the trustee will be responsible for selling the debtor’s assets and distributing the proceeds to creditors.

Should a consumer proposal be sought instead, the trustee will negotiate with creditors to develop a legally binding plan that accounts for the debtor’s financial situation. In either case, the presence of a neutral third party helps solve problems that could otherwise prove intractable.