What to Do Before Calling a Licensed Insolvency Trustee

The 45-60 minute consultation with a Licensed Insolvency Trustee is free and carries zero obligation. Every LIT in Canada offers this — it is not a sales pitch, it is a federally regulated professional assessment. But showing up prepared cuts the meeting time, gives you better options, and helps the trustee build a more accurate picture of your financial situation. You walk out with a clear recommendation instead of a vague “we’ll need more information.” Here are the 8 steps to take before you pick up the phone.

The hardest part is not the meeting. The hardest part is the 3 weeks you spend thinking about calling. The spreadsheets you open at 2 a.m. The calculator tabs you leave open on your phone. The way you rehearse what you’ll say and then close the browser. This checklist exists so that when you’re finally ready, you have everything in front of you and the call takes 5 minutes instead of becoming another reason to wait.

Step 1 — Calculate Your Total Debt Picture

Before anything else, sit down with a blank page and write down every single debt you owe. Every one. Not just the credit cards and the line of credit — every dollar you owe to every person and institution.

For each debt, record four things:

Start with the obvious debts: credit cards, lines of credit, car loans, personal loans. Then go deeper. Pull up your CRA My Account and check for any tax debt — Canadians carry an average of $8,700 in CRA debt when they file insolvency. Check your student loan balances through the National Student Loans Service Centre. Look at payday loan statements. Open that drawer where you stuffed the collection notices.

The debts people forget most often: CRA income tax balances, old student loans they assumed were forgiven, payday loans from 2-3 years ago still accruing fees, co-signed debts for family members, and informal loans from parents or friends.

Priya, a registered nurse from Brampton, discovered $12,000 in debts she had forgotten when she sat down to make her list. A $3,200 CRA reassessment from 2023 she never opened. A $4,100 student loan balance she thought was paid off. A $2,800 Visa card she stopped using two years ago but never closed. And $1,900 still owing to a payday lender she used during a gap between contracts. That $12,000 pushed her total from $34,000 to $46,000 — enough to change which debt relief option made the most sense.

Separate your debts into two categories: unsecured debt (credit cards, lines of credit, CRA, student loans, payday loans, personal loans) and secured debt (mortgage, car loan). Only unsecured debts are included in a consumer proposal. Secured debts are handled separately, but they affect your overall financial picture.

Use the DTI calculator to plug in your numbers and see where you stand. Then visit the debt tracker dashboard to see how your debt compares to the national average.

Step 2 — Check Where You Stand Against the Average

You are not alone in this. The average Canadian carries $174,900 in total debt, including mortgages, with a debt-to-income ratio of 174.9%. Strip out the mortgage, and the average non-mortgage debt sits at approximately $21,000.

Your DTI ratio — total monthly debt payments divided by gross monthly income — tells you and the trustee exactly how stretched your finances are. Here’s what the numbers mean:

If your DTI sits above 40%, you are past the point where budgeting or balance transfers solve the problem. A formal debt relief option — a consumer proposal, debt consolidation, or in some cases bankruptcy — becomes the faster path back to financial stability.

If your DTI is above 50%, you are in crisis territory. At this ratio, most of your income goes to servicing debt, and any disruption — a job loss, a rate increase, a car repair — pushes you into missed payments within weeks.

Run your numbers through the DTI calculator right now. Write down the result. Bring it to the meeting.

Step 3 — Gather Your Income Documents

The trustee uses your income to calculate two things: how much surplus income you would pay in a bankruptcy, and what you can afford in monthly consumer proposal payments. Accurate income documentation is the foundation of every recommendation the trustee makes.

Gather these documents before the meeting:

Pay stubs — 3 months minimum. Your most recent stubs showing gross income, deductions, and net pay. If you receive overtime, bonuses, or shift premiums, include stubs that reflect those amounts. The trustee looks at average monthly income, not just your base salary.

Tax returns — last 2 years. Your T1 General returns and Notices of Assessment from the CRA. These confirm your income history and reveal any CRA balances owing. If you haven’t filed your taxes, the trustee will flag this — unfiled tax returns create complications in both consumer proposals and bankruptcy.

EI or government benefit statements. If you receive Employment Insurance, CPP disability, OAS, GIS, child tax benefits, Ontario Works, or any other government income, bring your most recent statements. These count as income in the surplus income calculation.

Self-employment records. If you run a business or do contract work, bring your invoices, bank statements, and most recent tax return showing business income. The trustee needs to see your actual net self-employment income after business expenses.

Why this matters: in a bankruptcy, surplus income thresholds determine whether you pay extra and whether your bankruptcy lasts 9 months or 21 months. In a consumer proposal, your income sets the upper limit on what creditors expect you to pay. A trustee working with accurate income numbers gives you a precise consumer proposal cost estimate — not a guess.

Step 4 — List Your Assets and Their Current Values

Your assets determine what bankruptcy would cost you, and that number becomes the floor for a consumer proposal. Creditors accept a consumer proposal only when it offers more than they would receive in a bankruptcy. So the trustee needs to know exactly what you own.

Document each asset with its current market value:

Home equity. Look up your property’s current estimated value (check Realtor.ca or HouseSigma for recent comparable sales) and subtract your remaining mortgage balance. If you owe $380,000 on a home worth $520,000, your equity is $140,000. Provincial exemptions reduce how much of this counts in bankruptcy.

Vehicle. Check the Canadian Black Book trade-in value for your car, truck, or van. Subtract any remaining loan or lease balance. A vehicle worth $18,000 with a $12,000 loan balance has $6,000 in equity.

RRSPs and TFSAs. Log into your accounts and record current balances. RRSPs are protected in bankruptcy under federal law — except for contributions made in the 12 months before filing. TFSAs are not protected and are considered an asset in bankruptcy.

Bank accounts. Record the balance in your chequing and savings accounts as of today.

Other assets. Investments outside registered accounts, expected inheritance, tools of the trade (if you’re a tradesperson), life insurance cash surrender value, and any other property with resale value.

Here’s why this step changes outcomes. Provincial exemptions determine how much of each asset you keep in bankruptcy:

Read the full breakdown in our bankruptcy exemptions by province guide.

Dave, a licensed plumber from London, Ontario, walked into his LIT consultation convinced he would lose everything. He had $55,000 in unsecured debt and $45,000 in RRSPs. His first question: “Do I lose my retirement savings?” The answer: no. RRSPs are federally protected in bankruptcy under the BIA, with the exception of contributions made in the last 12 months. Dave had contributed $2,400 in the past year — only that amount was at risk. His $42,600 in older RRSP contributions stayed untouched. This changed his entire calculation. He filed a consumer proposal at $450/month for 60 months ($27,000 total) instead of draining his retirement to pay credit cards charging 22% interest.

Step 5 — Map Your Real Monthly Expenses

Not your budget. Not what you think you spend. Your actual spending over the last 3 months.

Pull up your bank statements and credit card statements for the last 90 days. Go line by line. Add up what you actually spent in each category:

The gap between your income and your expenses is what a trustee works with for proposal payments. If you earn $4,500/month net and spend $3,800 on living expenses (excluding debt payments), you have $700 available. A trustee designs a consumer proposal around that $700 — or less, to leave you breathing room.

Common surprise: people overestimate their expenses when they guess, and underestimate them when they actually track. The ones who guess too high give the trustee less room to build an affordable proposal. The ones who track accurately get a proposal that fits their real life. Bring the statements, not the guesses.

Review our breakdown of consumer proposal fees to understand how your monthly payment is structured once you file.

Step 6 — Pull Your Free Credit Report

Both Equifax and TransUnion provide free credit reports to Canadian consumers. You don’t need to pay for a credit monitoring subscription to get your report. Equifax offers free reports online and by mail. TransUnion provides free reports by mail or through their Consumer Disclosure program.

Pull reports from both bureaus. They sometimes list different creditors and different balances. Check for:

Total debts listed. Compare this list against the debt inventory you built in Step 1. If a debt shows on your credit report that you forgot to list, add it. If a debt you know about doesn’t appear on your credit report, include it anyway — the trustee needs the full picture.

Collection accounts. Any debts sold to collection agencies appear separately from the original creditor. A $3,000 credit card debt that went to collections might show as both a $3,000 write-off from the original creditor and a $3,400 balance (with collection fees) from the agency. The trustee sorts out the duplicates.

Current ratings. Your credit accounts are rated from R1 (pays as agreed) to R9 (bad debt/bankruptcy). Accounts rated R5 or higher have already been written off by the creditor and sent to collections. This information helps the trustee understand which creditors are most likely to be aggressive.

Your credit score does not matter for this consultation. The trustee does not use your credit score to determine your options. They need debt totals, creditor names, and account statuses. A consumer proposal or bankruptcy will impact your credit report regardless of your current score. Focus on accuracy, not the number.

Read our full guide on how to check your credit report for free in Canada for step-by-step instructions on pulling reports from both bureaus.

Step 7 — Understand Your Options Before the Meeting

You don’t need to become an expert. But walking in with a basic understanding of each option makes the conversation more productive. You ask better questions. You understand the trustee’s recommendation. You leave the meeting with confidence instead of confusion.

Here’s a quick overview of the main debt relief paths in Canada:

The most important question to answer before the meeting: do you want to keep your home and your car? This single factor narrows your options more than any other. If you have significant home equity, bankruptcy becomes expensive — a consumer proposal becomes the logical choice. If you have no assets to protect, bankruptcy is often faster and simpler.

Read the full comparison of all debt relief options to go deeper. Or take the debt relief quiz for a personalized recommendation based on your specific numbers.

Use the consumer proposal calculator to estimate your monthly payment before the meeting. This gives you a starting point to compare against the trustee’s assessment.

Step 8 — Book the Free Consultation

You’ve done the work. You have your numbers, your documents, and a basic understanding of your options. Now it’s time to make the call.

How to find a Licensed Insolvency Trustee: Use the Office of the Superintendent of Bankruptcy’s online directory or the find a LIT tool on this site. Enter your city or postal code to find trustees near you. Every LIT in Canada is listed in this directory — there is no separate certification or premium tier.

What to ask when booking: “Is this a free initial consultation?” The answer is always yes for Licensed Insolvency Trustees. If someone asks you to pay for a first meeting, they are not a LIT — they are likely a debt consultant or settlement company. Walk away and find a real Licensed Insolvency Trustee.

In-person vs. video consultations. Both are equally valid. Video consultations became standard across the profession during COVID and remain a permanent option. If you live in a rural area, work unusual hours, or simply prefer the privacy of your own home, a video call covers everything an in-person meeting does. You share documents by email or secure upload before or after the call.

Bring your spouse or partner. If you share debts, a mortgage, or household expenses, having both parties present saves time and gives the trustee a complete household picture. Joint consumer proposals — where both partners file together — can reduce total costs.

Marcus and Jennifer, a couple from Oshawa, had been arguing about money for two years. $67,000 in combined credit card and line-of-credit debt. He wanted to try balance transfers. She wanted to sell the house. They booked a joint LIT consultation, brought all their documents, and learned they qualified for a joint consumer proposal at $680/month for 60 months — $40,800 total to eliminate $67,000 in debt. They kept the house, kept both cars, and stopped arguing about money. The meeting lasted 55 minutes.

Read our guide on what to expect at your first LIT meeting so you know exactly how the conversation flows.

What NOT to Do Before Calling

The preparation steps above tell you what to do. These are the mistakes that make your situation worse — sometimes irreversibly.

Do NOT drain your RRSPs to pay credit card debt. RRSPs are federally protected in bankruptcy under the Bankruptcy and Insolvency Act (excluding contributions made in the last 12 months). Credit card debt is dischargeable — meaning it can be eliminated through a consumer proposal or bankruptcy. If you withdraw $30,000 from your RRSP to pay credit cards, you lose the retirement savings permanently, pay income tax on the withdrawal (up to 30% withholding plus your marginal rate at tax time), and eliminate money that was already protected. The credit card debt could have been resolved for $12,000-$15,000 through a consumer proposal.

Do NOT take on new debt. If you apply for new credit cards, increase your credit limits, or take out loans within 30 days of filing a consumer proposal or bankruptcy, those debts may be classified as fraudulent. Fraudulent debts are non-dischargeable — they survive bankruptcy and cannot be included in a consumer proposal. The trustee and the court look at the timing of new debt very carefully.

Do NOT pay one creditor and ignore the others. If you owe $5,000 to your brother and $40,000 across five credit cards, paying your brother back in full before filing creates a “preference payment.” The trustee can reverse preference payments made within 3 months of filing (12 months for related parties like family members). This complicates your filing and damages relationships.

Do NOT ignore CRA debt. The Canada Revenue Agency garnishes faster than any other creditor. CRA does not need a court order to freeze your bank account or garnish your wages — they have the legal authority to do it directly under the Income Tax Act. If you owe CRA money and you’re considering insolvency, moving quickly matters. Read about CRA bank account freezes to understand the timeline.

Do NOT wait until you’re sued or garnished. You have the most options when you act before creditors take legal action. Once a creditor obtains a judgment or starts garnishing your wages, the pressure to file increases and your negotiating position weakens. If you’re seeing debt warning signs — using credit cards for groceries, making minimum payments only, losing sleep over money — those are the triggers to call a LIT, not reasons to wait.

The Checklist: Print This and Start

Before you book the call, confirm you have:

• A complete list of every debt: creditor, balance, interest rate, minimum payment
• Your DTI ratio calculated using the DTI calculator
• 3 months of pay stubs and 2 years of tax returns
• Current market values for your home, vehicle, and registered accounts
• 3 months of bank and credit card statements showing actual spending
• Credit reports from Equifax and TransUnion
• A basic understanding of consumer proposals, bankruptcy, and other options
• Your spouse or partner aware of the meeting (if applicable)

You don’t need everything to be perfect. You don’t need colour-coded spreadsheets or organized binders. A shoebox full of statements and a handwritten list on the back of an envelope is enough. The trustee does this every day — they will help you sort through the details. What matters is that you show up.

Every day, 385 Canadians take this step. They pick up the phone, book the free consultation, and start the process of getting their debt under control. Some of them spent months preparing. Some of them called on a Tuesday morning after a bad night of sleep. Both groups got the same professional advice.

The consultation is free. The preparation takes about 2 hours. The relief of having a plan lasts years.

Find a Licensed Insolvency Trustee near you and book your free consultation today. Not sure which option is right for you? Take the debt relief quiz for a personalized recommendation, or estimate your monthly payment with the consumer proposal calculator.