What Happens After You Call a Licensed Insolvency Trustee

You’re lying awake at night, wondering how you’re going to make rent. The credit card payments are piling up, the phone won’t stop buzzing with collection calls, and every time you check your bank account, your stomach sinks. Maybe you’ve missed a car payment, dipped into savings just to cover groceries, or opened another credit card just to juggle bills. It’s exhausting.

But it doesn’t have to be.

Maybe you didn’t know there was someone out there whose entire job is to help you figure this out. Someone who knows the system, knows your rights, and can walk you through real ways to get out from under your debt. A Licensed Insolvency Trustee (LIT) isn’t here to judge you — they’re here to help you breathe again.

But what happens after calling a Licensed Insolvency Trustee? Here’s what to expect and why making that call might be the first real step toward peace of mind.

Need support now? Speak to a Licensed Insolvency Trustee today.

Step 1: The Initial Phone Call and Consultation

Picking up the phone to ask for help can feel awkward. But here’s the thing, it’s also brave. This first step is easier than you think, and you don’t need to prepare like you would for a job interview. You just need to be yourself and be honest.

When you contact a Licensed Insolvency Trustee, you’ll book a free consultation. Yep, free. It might happen the same day or sometime in the next few days, depending on your schedule.

You’ll talk about what kinds of debt you’re dealing with, whether you’re behind on any payments, what your income looks like, and if you’ve already tried anything else to get back on track. This could include things like credit card debt, payday loans, personal lines of credit, unpaid taxes, student loans, or even overdue utility bills.

If you don’t know all the numbers off the top of your head, that’s totally okay. The Trustee representative just needs a starting point — and your story is more than enough.

Step 2: Full Financial Assessment

As for what happens after calling a Licensed Insolvency Trustee, now it’s time to roll up your sleeves and take an honest, detailed look at your finances. Think of it as a financial deep-dive, but it’s not about what you “should’ve” done — it’s about understanding where things stand now, so you can figure out what’s next.

Together, you’ll go over everything: how much income is coming in (from your job, monthly benefits, or other sources), what your regular expenses look like (like rent, groceries, childcare, insurance), what debts you owe and to whom (credit cards, payday loans, lines of credit, tax debt), and what assets you have (like a car, a home, RRSPs, or savings accounts).

Never tracked your spending before? That’s totally okay. Your trustee will guide you through it, help fill in any gaps, and make sure the full picture is clear.

For many people, this is the first time they’ve seen everything laid out in one place. And yes, it can bring up big feelings, but it also brings clarity. And with clarity comes the ability to make empowered decisions.

Step 3: Reviewing Your Debt Relief Options

Here’s where things start to feel a little lighter. Once your LIT has a clear view of your finances, they’ll walk you through your options — and yes, there’s more than just bankruptcy.

This part of the process is all about giving you a clear, personalized picture of your next steps. Based on your income, debt load, asset values and long-term goals, your LIT will explore the following possible solutions:

• Consumer Proposal: A legal agreement where you pay back part of what you owe, over time, without interest — and you keep your assets.
• Personal Bankruptcy: A fresh start for those who can’t afford to repay a portion of their debt back, through a monthly manageable amount, but with more impact on your credit and and the ability to keep assets.
• Debt Consolidation Tips: Strategies to combine multiple debts into a single monthly payment, sometimes with lower interest. A reputable bank may assist with this.
• Informal Debt Settlements: Not legally binding, but a helpful option if you have a smaller number of creditors willing to negotiate, that is, if you have funds avalable to settle on all of the debts at once. It helps to understand how long a collection agency can legally pursue a debt, especially if you’re dealing with old or inactive accounts.
• Budgeting Support or Financial Coaching: In some cases, personalized money management advice is all you need to get back on track.

The consumer proposal process in Canada is a go-to for many people because it strikes the balance between affordability and protection. You don’t lose your belongings. You just gain structure and peace of mind.

Not ready to call yet? You can always browse our consumer proposal service page to get familiar with the process.

Step 4: Filing a Consumer Proposal (If Chosen)

If you and your Trustee decide a consumer proposal is the way to go, they’ll handle all the heavy lifting. Your LIT will draft the proposal and make sure everything lines up with your budget and the legal requirements.

The proposal lays out what you’re offering to repay, how long it’ll take (usually up to five years), and how often you’ll make payments — and yes, you can still get a loan while in a consumer proposal in certain situations. Once the paperwork is done, your Trustee files it with the government and notifies your creditors.

And just like that, you’re protected. No more collection calls. No more threats of wage garnishments. No more creditor lawsuits. It’s like hitting the pause button on the chaos.

Step 5: Proposal Review and Creditor Voting

Once your consumer proposal is filed, it gets sent off to your creditors. They’ll take a look at what you’re offering to repay and decide whether they’re on board. They have 45 days to give their answer, but your LIT keeps you in the loop the whole way through.

What are your creditors actually looking at? Mainly, the repayment offer. For example, if you owe $40,000, your proposal might offer to repay $16,000 over five years — broken into manageable monthly payments. That’s the kind of compromise many creditors are happy to accept, especially if the alternative is getting much less (or nothing) through bankruptcy.

Now, if the proposal doesn’t get the green light right away, don’t stress. It’s not a hard stop. Your Licensed Insolvency Trustee can go back, adjust the offer — maybe the amount, maybe the timeline — and resubmit it.

The good news is that most creditors are happy to work with you. They know a proposal often means they’ll get more back than if you filed for bankruptcy, so they’re usually open to finding a middle ground.

Step 6: Starting the Proposal and Staying on Track

Congrats! If your proposal is accepted, you’re officially on your way. You’ll start making your agreed-upon payments, usually monthly, and attend two short financial counselling sessions. Think of these as financial life skills bootcamps: they’re practical, encouraging, and designed to help you make the most of your fresh start.

Your LIT doesn’t disappear once things are in motion. They stay involved, tracking your payments, handling any creditor communication, and being there if life throws you a curveball.

And by curveball, we mean things like losing a job, taking unexpected time off work, a medical emergency, or even a sudden drop in income.

If something changes and you’re struggling to keep up with your proposal payments, your LIT can help you explore your options — like modifying your payment schedule or filing an amendment to your original proposal terms.

You’re Not Alone in This

This step-by-step insolvency process in Canada is designed to take you from being overwhelmed with debt to regaining control of your finances. It’s about giving you real options, practical support, and a plan you can actually stick to.

And if you’re feeling hesitant or still unsure whether this is the right path for you, that’s okay. Just starting the conversation is a powerful move.

Whether you’re drowning in debt or simply trying to understand your next move, this process is built to meet you exactly where you are. There’s no such thing as a “too small” or “too late” situation.

You’ve come this far, and that’s a big deal. If you’re ready for the next step, book a confidential consultation with a Licensed Insolvency Trustee today.

The call is free, and you’ll get a clear picture of what happens after calling a Licensed Insolvency Trustee. The path forward might be closer than you think.