Bankruptcy Trustee & Bankruptcy Lawyer – Players in the Insolvency Business

A debtor recently asked me to explain to him the difference between a Bankruptcy Lawyer and a Licensed Insolvency Trustee (LIT), and which of the two could help mitigate and or eliminate his financial problem with least cost and stress.

Most LITs are professional accountants (although some are not accountants) and go through an intensive course of study, and like the lawyers are well versed in the Bankruptcy & Insolvency Act (BIA) with following functional differences below.

However, unlike USA, where the bankruptcy trustee may be a local Bankruptcy Lawyer who is very knowledgeable about Chapter 7 or Chapter 13 bankruptcy, in Canada all personal and corporate bankruptcy or proposals are administered by a Licensed Insolvency Trustee (LIT) and not a Bankruptcy Lawyer. A Bankruptcy Lawyer in Canada cannot help any debtor declare bankruptcy or help them make a proposal, unless of course the lawyer is also a Licensed Insolvency Trustee (LIT), albeit a non-practicing lawyer.

A Bankruptcy Lawyer in Canada is used mostly on business related filings and to provide individuals advice in complicated situations. Under the Canadian legal system, a Bankruptcy Lawyer is really an “advocate” for his client and argues their position in a Court of Law. However, when it comes to Licensed Insolvency Trustee, there’s really nothing to argue about debts that an individual owes to his or her creditors because the job of a LIT is to ensure fairness to debtor and creditor, and following of rules and procedures as set out in the Bankruptcy & Insolvency Act (BIA).

If the Licensed Insolvency Trustee feels that there are contentious issues about debts or assets that a debtor has, the trustee will refer the debtor to a lawyer specializing in bankruptcy litigation.

When it comes to fees and costs of Licensed Insolvency Trustee (LIT), the Bankruptcy and Insolvency Act (BIA) regulates the payments. A Licensed Insolvency Trustee is normally paid for by the bankrupt through the bankruptcy estate. On the other hand, lawyers may charge a flat fee, or an hourly fee or a contingency fee, or a retainer fee, all of which may be relatively high, and often unaffordable for the debtors.

In spite of their functional differences, the Bankruptcy Lawyers and the Licensed Insolvency Trustees (LITs), both are significant players in the insolvency business in Canada and collaborate with each other at various crossroads.


Resolving your Tax Debt with Canada Revenue Agency (CRA) professionally

Owing tax debt to Canada Revenue Agency (CRA) can be deeply stressful and failure to take appropriate action can worsen the situation. Ignoring the problem will not go away on its own. This is equally true of any other debts you owe to your creditors. However, when it comes to tax debt owed to Canada Revenue Agency (CRA), it is extremely important to understand what options are available to you considering that CRA can take enforcement action against you without going to the court. Moreover when CRA takes the enforcement action against you, such as garnishing your salary | income, or placing a lien on your property, it can be virtually impossible to get them to lift the enforcement on your own. Professional help is required. Read More…

“Lien by any other name would be as thorny and troublesome”​

Builders’ Lien, Construction Lien, Mechanics’ Lien

Construction industry in Canada is a strong indicator of the country’s economic strength. It is a $171 billion plus industry that employs approximately 1.24 million. It is a heavily regulated industry with many stakeholders from land owners, financial institutions, builders, developers, engineers, construction companies, and suppliers. However, it is not without risks, given that most work is often performed by different tradesmen as either sub-contractors or independent contractors, and who may or may not have privity of contract with the project owner. Read More…

Parabellum: Study of War – Philosophy & Law of War

No study of war is complete without an understanding of the Laws of War and the Philosophy of War, the history of war, the ethics of war, the politics of war, the economics of war, and the diplomacy of war. It is from this that an understanding of what constitutes a “just war”, and how war as “deterrence” can be perfectly appreciated. War Studies are meant to provide an understanding of military campaigns and operations in the light of the wide-ranging economic, social, technological and political changes in the world that are shaping the globe today. It is designed to engage people to engage critically with others about the conduct and nature of contemporary warfare, and to enable them to understand the contexts in which modern military operations take place. Read More…

Spy versus Spy

The Love Hate Relationship between United States’ Central Intelligence Agency (CIA) & Pakistan’s Inter Services Intelligence (ISI) dates back to 1954.

Spy vs Spy

Even though Pakistan was not considered part of South East Asia, by signing the Mutual Defense Agreement with the United States and subsequently joining the South East Asia Treaty Organization (SEATO) in 1954 and Central Treaty Organization (CENTO) Pakistan unwittingly became an “allay” of the American Power struggle in a Cold War against Communism. The U.S. agreement to provide economic and military assistance to Pakistan and it’s partnership in the Baghdad Pact CENTO and SEATO strengthened relations between the two nations. Pakistan’s close proximity to the Soviet Union, China and India (the Non-Aligned Nations), and the emerging Communist Block, the Middle East & Iran, (centers of oil reserves) placed it in a very strategic position to be exploited for intelligence and counter-intelligence purposes with the sole objective to contain the spread of Communism in South East Asia. This was the beginning of close cooperation and partnership with US Central Intelligence Agency (CIA) and Pakistan’s Inter Service Intelligence (ISI) and what followed since 1954 is a mutual love, hate, trust and mistrust relationship between two of the world’s strongest intelligence agencies. Read More…

Understanding Insolvency

Society as a whole benefits when businesses and individuals stay solvent and contribute to the economy. There is a ripple effect on the society and families when businesses face financial death, and or individuals are saddled with the burden of high debt loads.
Insolvency is a financial state of being which can lead to bankruptcy but the condition may also be temporary and fixable without legal protection from creditors. Insolvency does not necessarily lead to bankruptcy, but all bankrupt debtors are considered insolvent. Read More…

Debt is Not Cool

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Author E.E. Cummings, when talking about his debts, is reported to have said, “I am living so far beyond my income that we may be said to be living apart.” Humorous as it may sound, being in debt is never cool.

Many of us are guilty of self-comforting ourselves with messages like, “A little debt won’t hurt, will it?” But it’s this kind of thinking that can lead to a debt nightmare, particularly if you’re not sure how to manage debt. While you may think it’s cool to have the latest fashions or gadgets or vehicles, remember: it is not cool to be in debt.

Credit and debt keep us fixated on the past and the future. Part of our attraction to debt is the illusion of success and emotional high from buying new things without having to part with our money. Others see our buying power and assume we’re successful individuals.

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Exempt Assets under Bankruptcy & Insolvency Act: Good Credit versus Bad Debts

mnp 02A former colleague of mine used to send out letters to consumers with two specially packaged Tylenol attached, along with a brief message that said, “Taking these two tablets will make your headache disappear, but it will not provide permanent relief.”

If debt were a brand today, it would find itself in the same place as Tylenol – associated with lethal toxicity over prolonged use yet without a corresponding loss in the value of the brand. Debt, any way we look at it, is inevitably a one-way trip to some form of bondage. And unless we do something about debts, it causes headaches and associated stress.

The stark reality is that a zero-debt existence is impossible for most people, anywhere. Many Canadians are in a sense, insolvent, meaning that their liabilities (debts) exceed the value of their assets. This does not necessarily mean all insolvent people are bankrupt. To file for bankruptcy you must you owe at the least $1,000 in debts, have more liabilities (debts) than assets and cannot maintain payments on the debt as it falls due. Only when an insolvent person makes a voluntary Assignment in Bankruptcy can he or she be said to be bankrupt.

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Christmas Without Debts – “It’s A Wonderful Life”

Holiday DebtA survey conducted by Pollara for BMO revealed that Canadian holiday spending plans in 2013 were up for the third straight year, with anticipated average spending on travel increasing 22% to $689, while average gift-buying went up only slightly, to $678 from $674. In the survey of some 1,215 Canadians aged 18 or over, 41% of those surveyed said they start their holiday shopping in November, while 33% begin earlier and 23% wait until December.

Following this BMO survey, Pollara conducted a separate survey for Visa Canada of 1,001 Canadians which revealed that three in four of those polled said they planned to shop online for gifts and that the majority, 78%, said they planned to use credit to do so.

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Retirement Debt

Canadians of all ages are awash in credit card debt, often paying exorbitant interest rates. Unfortunately, debt is becoming embedded in our society. With the financial squeeze and increased unemployment rates, it’s more difficult than ever for most people to pay off their debts and save for retirement. Retirement can and should be an enjoyable and relaxing time of life, but for Canada’s aging population, it can bring about financial difficulties, stress and anxiety. Many seniors are forced to live on significantly reduced incomes in their later years, making everyday living expenses and monthly bills more difficult to afford.

Canadian Household Debt GrowthThere has been much concern expressed about the increasing proportion of older Canadians who are approaching retirement with significant debt, including mortgage debt on owner-occupied housing. The reality is that seniors generally have lower than average incomes, with very little money left over each month to put towards debt repayment.

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