A Licensed Insolvency Trustee (LIT) is a special type of financial professional. They are held to a higher standard of ethical behaviour that is overseen by a branch of Canada’s Federal Government. To learn more about how LITs are different from other financial professionals.
How Does One Become a Licensed Insolvency Trustee?
Becoming a Licensed Insolvency Trustee (LIT) is no easy task. As the Office of the Superintendent of Bankruptcy (OSB) tells us, they must complete several exams and pass an oral examination to earn their license. Additionally, they must be solvent and of good character. So, what are these exams that prohibit just anyone from getting a license?
Chartered Insolvency and Restructuring Professional (CIRP) Qualification Program (CQP)
As though there weren’t enough acronyms in the title of the program, understanding its purpose only brings more woe. Due to a Memorandum of Understanding (MOU) with the OSB, only one organization can deliver this exam.
They are the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). CAIRP is “…corporation in 1979 to advocate a fair, transparent and effective system of insolvency/restructuring administration throughout Canada.” The course they offer is too complex to detail here. Still, before challenging the final exam, candidates must have a mind-boggling 2,400 hours of relevant insolvency experience.
CIRP National Insolvency Exam
Speaking of the final exam, CAIRP takes a strategic approach to education. The Competency-based National Insolvency Exam (CNIE) implements “…competency-based education process, one that focuses not only on knowledge acquisition but on building competencies and skills.” This ensures that successful challengers are capable of the work they will undoubtedly perform after receiving their lesson. Not only does this course cost $500, but it also involves remarkably interesting testing criteria as well.
Insolvency Counsellor’s Qualification Course or Practical Course on Insolvency Counselling (PCIC)
Though the Government’s website shows an option for this final qualification, CAIRP does not. Indeed, they are the provider of this course as well! The Practical Course on Insolvency Counselling (PCIC) and the CQP have similar entrance requirements. Essentially, they are:
- Have a high school diploma or GED-equivalent or 30+ hours of relevant work experience
- Be enrolled in the CQP
- Hold a relevant professional designation relating to the accounting or auditing field recognized in Canada or an undergraduate degree from a recognized post-secondary institution
What Services Do Licensed Insolvency Trustees Offer?
Interestingly, in Canada, you cannot file bankruptcy without first consulting a LIT. This helps protect you and your lenders from negative effects from the contract between you. LITs help you understand the possible repercussions of filing bankruptcy and steers you towards other options first. However, if it is ultimately the best option for you, they will assist in notifying lenders, drafting consumer proposals, and much more.
In situations where there is a large amount of personal or company debt, consumer proposals can help relieve tension with debtors, halt interest charges and stop harassing phone calls. They also corral all the debts into a single payment, helping to make payments simpler and more straightforward.
Debt counselling is a required part of filing for bankruptcy, but it is also a wonderful service in its own right. Here is where LITs help their clients understand proper financial health and give them strategies or solutions to not increase their debt. Financial literacy is an important skill, and this service can provide several long-lasting benefits.