When it comes to licensed insolvency trustees, like those working at Reynolds & Associates, understanding their pay scale can be important to some.
After all, knowing how they get paid can be beneficial for illustrating how they are on your side during the bankruptcy or consumer proposal process.
So, where do licensed insolvency trustees earn their money?
At the end of the consumer proposal process is the answer. They are paid out a percentage of the total amount owing after all other debts have been satisfied. This is the most straightforward way to look at paying licensed insolvency trustees.
Do Consumers Have to Pay LITs?
Not really, but kinda. No, you don’t have to acquire additional funds to pay your licensed insolvency trustee, but your debt will be where they eventually earn their income. As a result of this, they are taking away from the total value of your assets.
Still, it is highly regulated by the Federal Government and unlikely to be an unseemingly or unfair amount for the excellent services that they render on your behalf.
Perhaps one of their greatest benefits is that they stop your communications with the debtors. That frustration and fear, and anxiety about their next call just melt away as the LIT takes over your accounts.
Sometimes the ensuing peace can be useful for helping you see things clearer and brighter. And, that’s just like a non-monetary service they provide.
Do Debtors Have to Pay LITs?
Unfortunately, the answer here is much the same as in the preceding paragraph. That is, “not really, but kinda.” You see, because LITs are responsible for reducing the total payment amount to all debtors and for negotiating the terms of the consumer proposal or bankruptcy, they are getting paid.
And, because they are taking their share from the total pool of the estate, they are necessarily detracting from the total amount the debtors will receive.
This may sound like a technicality, but it is the case that the debtors have the right to vote on the amount of payment for the LIT. The amount can be over 7% of the total estate’s value, but it goes to show that there is more to the equation than the LIT simply deciding their fee alone.
Still, it is likely the case that most proposals are set by the LIT and accepted without any change to the LIT’s fee.
Is LITs Worth It?
Absolutely they are. They’re federally regulated. They’re motivated to act on your behalf because they only get paid on a successful proposal. They reduce your debt, handle the debtors and then send you to school to teach you how to avoid falling into the same trap. Like, what better option could you hope for from a financial institution?
When you are suffering from too much consumer or commercial debt in Canada, these professionals act as your fiscal fallnet. You deserve to have financial freedom and the chance to try again.
But, if you are just interested in learning more about how to manage your debt effectively, they might be able to help you there too.