Discussing our financial situation is not easy, especially when we are in debt. Some people are hesitant to meet with a Licensed Insolvency Trustee (LIT) because they worry about having to reveal personal information.
If, you are looking for solutions to manage your debt and would like to learn more about what information to disclose, this post includes a complete list of the information to provide to your LIT so they can offer the best solution to your debt.
Why you should meet with a Licensed Insolvency Trustee and what information you should disclose
To put an end to your debt, you must, first of all, meet with a Licensed Insolvency Trustee.
The first consultation is free and is used to understand all the details of your financial situation and develop possible solutions to restore your financial health. To do this, the LIT must evaluate your financial situation, including your debts and income, based on true and accurate information. Without this information, the results of the LIT’s analysis may be distorted, and their proposed solution may be inappropriate for your situation. That’s why it is so important to provide accurate and up-to-date information.
The first meeting with a Licensed Insolvency Trustee is also the perfect time to obtain information about the insolvency process. By talking to this professional, you will have all the tools you need to choose the best solution to deal with your debt.
The 5 categories of information you must disclose
1. Your assets
To fully analyze your financial situation, a LIT must understand the extent of your assets. All assets must be disclosed, such as rental properties, a house, vehicles, and investments of all kinds (RRSP, RESP, etc.)
2. Your debts
During the meeting, it is important to identify each of your debts for the Licensed Insolvency Trustee, including:
- Credit card balances
- Personal loans
- Unpaid income tax
- Unpaid cell phone bills
- Alimony/child support arrears
- Any other debts
Whether small or large, all debts must be disclosed so that the LIT can determine your total amount of debt. They can then develop a debt repayment plan that considers your financial means and your monthly needs.
3. Your personal information
The Licensed Insolvency Trustee must include some basic personal information in your file:
- Date of birth
- Name of employer
- Marital status
Remember that in order to confirm your salary and the state of your income, you will be required to provide a recent pay stub (or proof of other income) to the LIT.
Regarding marital status, make sure you inform the LIT of a recent or upcoming change, such as a recent legal separation or one in preparation. A change to your marital status may influence which solution is best to repay your debts, especially if a loan is shared with your ex-spouse.
Furthermore, a person who owns or previously owned a company in the past five years must divulge this information. In this case, additional information will be required to complete the file.
One last facet of personal information may also be required: your health status. If you are suffering from an illness that prevents you from working during a given period, it is recommended that you divulge this information. This kind of situation can influence the LIT’s analysis as well as the solutions they develop.
4. Budget and monthly expenses
Your cost of living is a key piece of data that influences your ability to repay your debts. Despite the process, it is essential that a person be able to live and meet their primary needs. This is why the Licensed Insolvency Trustee will ask certain questions during the meeting; they need to assess your household’s cost of living and your budget. They will take into account your monthly expenses and all data mentioned previously to evaluate possible solutions to your debt.
5. Other relevant information
In addition to your salary, any current or future additional income must be disclosed. Examples of this kind of income include an inheritance, a performance bonus, a salary increase, a tax refund, or the future sale of a property.
To find the best solution to recover from your debt problem, the LIT must be aware of any changes that will affect your financial situation.
Some debtors are reluctant to reveal such information because they worry that they will incur additional costs. Although this is possible, it is not automatic. It varies from one situation to the next.
Likewise, you must inform the LIT of any additional payments made to one or more creditors. In fact, any payment out of the ordinary made in the 12 months preceding the insolvency procedure must be disclosed.
Gifts, transfers, and sales of assets
Gifts with a value of $500 or more made to your family or to others must be disclosed during the meeting with the Licensed Insolvency Trustee. Transfers or sales of assets that occurred in the past 12 months, and some up to five years prior, must also be declared to the LIT.
For the sake of transparency, it is better to provide this information to the LIT. This approach is beneficial both for the debtor, who demonstrates their good faith by freely declaring any transaction concerning them, and for creditors, who will receive a complete picture of their situation.
This also allows the debtor to clarify their situation by providing explanations.
Finally, it is important that you inform the LIT of any legal proceedings against you or any lawsuits you have filed.
Meeting with a LIT is a step forward
Once all the information has been transmitted and the solution selected, you will be able to begin efforts to put an end to your debt.
If any information is omitted, you should mention it to the LIT. The concept of good faith is paramount, and demonstrating transparency can prevent legal actions or recovery measures being taken against you.
For a free consultation with a Ginsberg Gingras LIT, fill out our Online Consultation form.