Becoming a Licensed Insolvency Trustee, known as an LIT, is long and arduous. However, it is a very rewarding and stable career choice. An LIT has an enormous amount of responsibility; therefore, the government has strict standards before allowing someone to enter the profession.

This article will discuss everything you want to know about becoming a LIT, the challenges, and the outlook facing these insolvency professionals in the future.

This page is for those who want to become licensed insolvency trustees. If you are looking for one, fill out the form on this page. We will then have our debt solutions expert call you.

Insider Tips for Becoming a Licensed Insolvency Trustee

Becoming a Licensed Insolvency Trustee can be an exciting and rewarding career path for those willing to work hard and meet the qualifications.

As an LIT, you would play a vital role in helping individuals and businesses navigate the debt relief and restructuring process, which is critical to the Canadian economy.

The eligibility criteria for becoming a LIT are stringent. Candidates must have a university degree or diploma in a related field, such as law, accounting, or business, and at least two years of relevant work experience in a related field.

To obtain their license, candidates who meet these requirements must complete a series of exams and courses covering various topics, including insolvency administration, bankruptcy law, and ethical practices.

These exams and courses are designed to ensure that candidates thoroughly understand the laws and regulations governing insolvency proceedings.

Experience in the insolvency field

Apart from the exams and courses, candidates must also complete at least 12 months of practical experience under the supervision of a licensed LIT to gain hands-on experience in insolvency.

This practical experience allows candidates to apply the knowledge from their exams and courses to real-world situations.

Maintaining a LIT license requires ongoing professional development to stay up-to-date with the latest laws and regulations. This professional development includes attending conferences and seminars, participating in training courses, and reading professional literature.

Key Qualifications: What You Need to Become an Insolvency Trustee

Being a successful LIT requires certain essential skills. Excellent communication skills are crucial since LITs must work with clients and other professionals to help them understand the insolvency process.

Strong analytical skills are also essential since LITs need to analyze complex financial situations and develop effective solutions. LITs must have strong organizational skills since they manage a large volume of paperwork and ensure all deadlines are met.

Providing compassionate support

Becoming an LIT offers career opportunities in various settings, such as law firms, accounting firms, government agencies, or as an independent consultant providing insolvency services to freelance clients.

LITs also enjoy a median salary of $91,000 per year, which may vary depending on location, experience, and the size of the firm or agency that employs them.

While becoming a LIT can be a rewarding career, there are also challenges to consider. LITs must manage the emotional and psychological impact of working with clients experiencing financial distress, providing compassionate support while maintaining a professional distance.

They must also manage the workload and meet the job’s demands, juggling multiple cases simultaneously and working under tight deadlines while managing their time effectively to ensure all tasks are completed on schedule.

Becoming a Licensed Insolvency Trustee

Despite the challenges, becoming a LIT can be a fulfilling career path. LITs are critical in helping individuals and businesses navigate difficult financial situations, providing them with a path toward a fresh start. They also work with diverse clients, developing a wide range of skills and expertise.

Becoming a Licensed Insolvency Trustee requires specific skills and qualifications, but it can be a fulfilling and rewarding career path.

If you meet the eligibility criteria, have the necessary skills, and are willing to put in the effort, you could be on your way to becoming a LIT and making a significant contribution to the Canadian economy.

Becoming A Licensed Insolvency Trustee

The Superintendant of Bankruptcy (Industry Canada) is responsible for granting licenses to LIT, as described in Directive No. 13R6, LIT Licensing.

The minimum qualifications for someone to get a license are:

• be of good character and reputation,
• be solvent
• Complete the courses
• And pass an Oral Board of Examination.

Let’s look at each of these more closely.

Federally Regulated Insolvency Counsellor

To be of good character—The specific requirement the superintendent looks at is whether you have had a criminal offence for which you have not been pardoned. If you have one, then the superintendent has the discretion to deny you a license.

Be solvent. If you are going to counsel companies and consumers about managing their finances, the superintendent wants to know whether you have declared bankruptcy or filed a consumer proposal. You should be on solid financial footing.

Pass the Courses – The Canadian Association of Insolvency & Restructuring Professionals is a non-profit organization responsible for developing courses and training insolvency professionals to have a high standard of care and integrity.

The Licensing Process: Step-by-Step Guide for Aspiring Insolvency Trustees

They have developed 3 courses to complete to become a Licensed Insolvency LIT. As long as the individual passes everything on time, these courses will take a dedicated individual 2 years to complete.

Pass the Oral Board Exam—The OSB administers the Oral Board Exam. It is an oral exam in which you will answer six questions from a panel of three people: the superintendent of bankruptcy, an insolvency LIT, and an insolvency lawyer.

If you pass this exam, you are provided with a full or partial license.

Challenges To Become A Licensed Insolvency Professional

Once granted the license, the superintendent will put you on a probationary period for 24 months.  This probation will limit the type of files you can handle while you learn the ins and outs of the profession.

It is a rigorous process, so it is very important that you have the passion, will, and desire to motivate yourself when things get difficult.

The biggest challenge to becoming a LIT is passing the education and courses you will need to take.

A LIT needs a solid background in accounting.  Most are Chartered Accountants.  Becoming a CA requires a university degree, plus another 2 years to get your designation.

Once you complete the designation, you will need to take another two years to get a Chartered Insolvency & Restructuring Professional designation. Then, you will need to pass the Oral Board Exam.

Licensed Insolvency Professional Debt Relief Options

To become a Licensed Insolvency LIT can take up to 8 years!  And that is if you pass all of the coursework and exams.  If you fail, which is very likely due to the 50% fail rate of the National Insolvency Exam, then you will have to tack on more time.

One of the other challenges is finding a firm that will provide the breadth of training you need to get the experience you require to get a full license.

It is important to find a boutique firm that will provide corporate and consumer work to expose you to different scenarios.

It may be difficult to find employment. Insolvency is a cyclical business, and if you choose to live in an area with a low insolvency rate, you may not have a steady job.

Granted A Licence From the Superintendent Of Bankruptcy

One of the largest concerns for the profession is the ability to attract new talent.  As outlined above, the qualification is gruelling and takes a long time to complete.

According to the Superintendant of Bankruptcy, there were only 30 candidates to challenge the oral board exam last year.  Of the 30, 24 were granted licenses.

This is down dramatically from 52 in 2014. There is also the concern that the average age of a Licensed Insolvency Trustee is 56. With retirement looming, the older LITs will need to attract attractive talent somehow.

Although LITs are ageing and new LITs are not blistering the market, there is no concern for the industry anytime soon.  According to the national LIT directory, 1,067 licensed insolvency LITs exist in Canada.  In 2015, there were 125,000 consumer insolvencies.

That works out to an average workload of 117 insolvency filings per LIT.

Assuming that each proceeding takes 3 hours of LIT time, there is still plenty of capacity for the existing LITs to handle the workload.

Licensed Insolvency Trustee Conclusion

A very significant event occurred in April 2016. The title “Licensed Insolvency LIT” (LIT) replaced the older “Bankruptcy LIT.”  What impact this will have on the profession is still yet to be seen.

The community hopes that the name change will enable consumers to get clear. Further, the public should know all the services of a LIT. This is instead of the public just seeing them as offering bankruptcy services.

Insolvency rates are stabilizing at around 4% per 1000 people since a peak of 5.8% in 2009.  There is bad news for Canadians. It is one of the highest-leveraged countries in the world.

We have a debt-to-equity ratio of 164% and an average credit card debt load of $25,000.