A licensed insolvency trustee is the only professional in Canada who can legally file a consumer proposal or a bankruptcy for you. Everyone else selling debt help has to send you to one eventually. The trustee’s fee is fixed by federal tariff, so shopping around on price is pointless.
Knowing that changes how you choose. The question stops being who is cheapest and becomes who explains your options honestly before you sign.
Key takeaways
- Licensed by the Office of the Superintendent of Bankruptcy, and by nobody else.
- Fees are set by regulation. A trustee cannot discount them or add to them.
- First consultations are normally free, with no obligation.
- Consumer proposals suit total debts under CA$250,000, excluding your mortgage.
- A first bankruptcy discharges automatically in 9 or 21 months.
- Fines, restitution orders and support arrears survive a discharge.
What the Licence Actually Buys You
According to the Office of the Superintendent of Bankruptcy, an insolvency trustee is the only professional authorized to administer the proceedings that discharge debt. That same guidance points people with total debts under CA$250,000, excluding the mortgage on their home, toward a consumer proposal.
Holding the licence is the whole distinction.
Debt consultants, credit counsellors and settlement companies can all give advice. None of them can file anything. Some charge four figures upfront for paperwork and coaching, then walk you across the hall to a trustee who would have seen you for free.
Put one question to anyone selling you debt help: are you licensed by the OSB? A trustee will answer yes and give you a licence number you can verify on the federal register in under a minute.
Who the Trustee Works For
This is the part firms rarely put on their homepage.
Every trustee is an officer of the court. They owe duties to you, to your creditors and to the integrity of the insolvency system at the same time. They are obliged to investigate your affairs, report transfers you made before filing, and oppose a discharge where the facts call for it.
None of that makes a trustee an adversary. It does mean they are not your advocate the way a lawyer would be. Full disclosure at the first meeting protects you. Selective disclosure is what turns a routine nine-month file into an opposed discharge.
What a Licensed Insolvency Trustee Costs
Tariff, not price list. A consumer proposal costs the same at every firm in the country:
| Charge | Amount | Paid to | When |
|---|---|---|---|
| Trustee administration | CA$1,500 flat | Your trustee | CA$750 on filing, CA$750 on approval |
| Share of distributions | 20% of funds paid to creditors | Your trustee | As payments come in |
| Filing fee | CA$104.24 | The OSB | On filing |
| Counselling | CA$170 for two sessions | Your trustee | As sessions complete |
| Government levy | 5% of distributions | The OSB | Deducted from creditor payments |
All of those charges come out of the money you were already paying into the proposal. You do not receive a separate bill, and a firm that asks for a retainer before filing is doing something the tariff does not contemplate.
Proposal or Bankruptcy
Many people arrive expecting bankruptcy and leave with a proposal. They differ in ways that matter well beyond the monthly payment.
| Feature | Consumer proposal | Bankruptcy |
|---|---|---|
| Debt ceiling | CA$250,000, mortgage excluded | None |
| Typical length | Up to 5 years of payments | 9 to 21 months on a first filing |
| Your assets | You keep them | Non-exempt assets are sold |
| Payment amount | Fixed when creditors accept | Rises and falls with your income |
| Credit reporting | Roughly 3 years after completion | Roughly 6 years after discharge |
Creditors vote on a proposal. If holders of a majority of the dollar value accept, it binds every unsecured creditor, including the ones who voted against it.
Bankruptcy has no ceiling, which makes it the route above CA$250,000 or where income is too unstable to promise a fixed payment for five years. Before either route, check whether a creditor has already sued you. A judgment obtained in Ontario’s Small Claims Court and its CA$50,000 limit can bring wage garnishment weeks before you file.
How Long a Bankruptcy Lasts
Discharge is not open-ended. The OSB’s bankruptcy discharge guidance sets it at 9 months for a first filing with no surplus income. Which of the four timelines applies to you turns on two things: whether you have filed before, and whether your income clears the surplus threshold.
- First bankruptcy, no surplus income: automatic discharge at 9 months.
- First bankruptcy, surplus income payable: 21 months of contributions.
- Second bankruptcy, no surplus income: 24 months.
- Second bankruptcy, surplus income payable: 36 months.
Surplus income is not a penalty on earning well. It is a formula, set against household size, and it captures the portion above a standard the OSB publishes each year. Earn more during the bankruptcy, and your payments rise with it.
Any discharge can also be opposed by a creditor, by the OSB, or by your own trustee. That is when a nine-month file turns into a court date.
The Debts That Do Not Disappear
Discharge wipes out most unsecured debt. Credit cards, lines of credit, payday loans, tax debt and old utility bills all go.
Section 178 of the Bankruptcy and Insolvency Act carves out the rest:
- Court-ordered fines, penalties and restitution.
- Child support and spousal support arrears.
- Debts obtained by fraud or false pretences.
- Student loans, if you stopped studying less than seven years ago.
- Damages awarded for intentional bodily harm or sexual assault.
Restitution catches people out most often, because it feels like a debt rather than a sentence. Our guide to what restitution means in Canada and who gets paid explains why those orders follow you through a discharge.
Secured debt sits in its own category. Your mortgage and car loan survive because the lender holds the asset. Keep paying, and you keep the asset.
How to Check a Trustee Before You Sign
Four minutes of checking prevents most bad experiences:
- Search the OSB’s public register for the individual’s name, not just the firm’s.
- Confirm you are meeting a licensed trustee rather than an unlicensed agent.
- Ask what they would recommend if you did nothing at all for six months.
- Get the payment schedule and the completion date in writing before signing.
Any trustee who cannot explain why a proposal beats bankruptcy in your specific situation has not looked at your situation.
Where to Go From Here
Book a free consultation with two different trustees and compare what each recommends, not what each charges. Bring a list of every debt, your last two pay stubs, and your most recent tax assessment. The meeting is more useful when the numbers are in front of you.
More plain-language guides are in our Canadian law explainers. To talk through where your situation fits, contact the Lawverra team.
This article is general information about Canadian law and is not legal or financial advice. Speak to a trustee or a Canadian lawyer about your own circumstances.
Frequently Asked Questions
Typically no. The initial consultation is free and carries no obligation to file.
In a proposal, yes, provided you keep paying the mortgage. In bankruptcy, it depends on the equity and your province’s exemptions.
Not from the trustee. A wage garnishment already in place is a different matter, since your payroll department is served directly.
Ordinary income tax debt is unsecured and is discharged like any other. A registered lien on property is not.
Yes. The tariff still applies, and your trustee will set a payment plan for it.
