2. Free Initial Consultation
The second step in our series on how to file for bankruptcy in Canada is to arrange for a free initial consultation with a licensed bankruptcy Canada trustee. Why? Because only a trustee, licensed by the federal government in Canada, can administer your bankruptcy.
But wait! Why would I want to talk to a bankruptcy trustee? Won’t they just try to talk me into filing bankruptcy, because that’s how they make money? Yes, it’s true that bankruptcy trustees are private businesses, and they get paid out of the funds that are in your bankruptcy estate. So doesn’t that mean they will give you biased advice?
In most cases, no. Here’s why: To become a bankruptcy trustee takes many years of study and training. The typical trustee in Canada has a university degree, and many are also qualified accountants (such as chartered accountants). The typical trustee will have at least five years of practical experience before they get their license, and all are required to complete a rigorous training program that generally takes at least five years, and includes many exams. After all that work, a trustee wants to be in business for a long time, so they have a strong incentive to give good advice.
Think about it: trustees get a lot of their work by word of mouth. If you have a good experience with a trustee, you will tell your friends and family. If a trustee gives you bad advice, you will also tell your friends and family. It is therefore in a trustee’s long term best interests to give good advice, and that may include telling you that you don’t need to go bankrupt.
Debt Consultants
But what about those ads I see for “debt consultants”? They promise that they will look out for me, where a trustee only works for the creditors.
First, why do you think they are “looking out for you?” They are running a business, and they want to get paid, which is fine, but that doesn’t mean they are looking out for you. All they can do is review your situation, and then refer you to a trustee if you need to go bankrupt. Why would you pay an extra fee to get referred to a trustee, when you can have a free initial consultation with a trustee?
Second, a trustee does not work for the creditors. A trustee is an independent business person, and their job is to ensure that all parties follow the rules. Yes, it’s true that the funds generated in a bankruptcy are distributed to the creditors, so in that sense the trustee is “working” for the creditors. But it’s you, the debtor, that chooses the trustee, and it’s you, the debtor, who has all of their debts eliminated, so on that basis the trustee is working for you. So who does the trustee work for?
In reality the trustee doesn’t work for either side; the trustee is more like a referee in a hockey game. The trustee’s job is to make sure both sides follow the rules, so that everyone is treated fairly.
So, to have a full review of your situation and to review your options, book your no-charge initial consultation, contact a licensed trustee today.
{ 2 comments… read them below or add one }
i still do not understand why i need a trustee i have filed legal documents myself and i know what i owe and to whom so if all the trustee has to do is fill out paper work well i can write if you can please help me understand or explain how i can file without a trustee it does not seem ethical to me and also seems to me that a trustee has a monopoly on bankrupcy.
There are two answers to your question about why you need a trustee:
First, it’s the law.
Second, bankruptcy law is quite complicated. It’s not as simple as writing a letter to all creditors. A bankruptcy trustee is required to verify all assets and income, so that a fair distribution can be made to all creditors.
You are correct that bankruptcy trustees have a monopoly on bankruptcies. Dentists in Canada also have a monopoly on dental work, and heart surgeons have a monopoly on heart surgery. That may not be fair, but the government has decided that that’s the way it needs to be to protect the public.
Having said that, you are free to contact your own creditors without a trustee. You can make an informal proposal to them, and tell them your situation, and ask that they reduce or eliminate your debt. That’s how you can deal with your debts without a trustee. You could also contact a credit counsellor and ask them to talk to your creditors for you.
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