Difference Between a Licensed Insolvency Trustee and a Credit Counsellor

Are you in debt and not sure who to turn to? If you’re feeling stressed, it can be overwhelming to figure out who to trust for financial advice. Asking for help is the first step to getting out of debt and most people wish that they’d been brave enough to reach out sooner.

In this post, you’ll learn the difference between a Licensed Insolvency Trustee (LIT) and a Credit Counsellor. The goal is to help you figure out who to contact to get the help you need with your finances.

What is a Credit Counsellor?

Credit Counsellors support you when you are having trouble managing your money. A Credit Counsellor can offer financial advice, budgeting and help getting out of debt. Their experience, training, and qualifications vary. Credit counselling is available from not-for-profit organizations and for-profit companies in Canada. It’s important to do your research to find a trustworthy agency that is upfront about fees.

Find accredited, non-profit Credit Counselling Agencies here including Money Mentors.

Money Mentors is a non-profit Credit Counselling agency in Alberta. Our Credit Counsellors have the Accredited Financial Counsellor Canada (AFCC) certification. This certification ensures their comprehensive knowledge in financial counselling. It also requires that they uphold the Professional Code of Ethics and Standards.

What is a Licensed Insolvency Trustee?

A Licensed Insolvency Trustee (LIT) is authorized by the Government of Canada to help people and businesses that can’t pay their debts through the legal solutions of insolvency. LITs are the only professionals who can administer consumer proposals and bankruptcies. They act as a third party between you and your creditors. LITs handle paperwork, communicate with creditors, and ensure the bankruptcy or consumer proposal is fair and follows the law.

Bankruptcies and consumer proposals are legal proceedings. LITs work within federal legislation and are known as ‘Officers of the Court’. This is why it is crucial to ensure you are working with an LIT if you choose bankruptcy or a consumer proposal. Avoid any organization or company that claims to be able to help you with a bankruptcy or a consumer proposal that does not have LITs. If you are unsure, it’s always best to speak to an unbiased Credit Counsellor for more help.

Understanding the Differences: Licensed Insolvency Trustees vs. Credit Counsellors

Understanding the distinct roles and services of LITs and Credit Counsellors is helpful when you’re in a difficult financial situation. Let’s dive into some of these differences.

Nature of Services

The main difference between LITs and Credit Counsellors is the nature of their services. LITs focus only on consumer proposals and bankruptcies.

In contrast, Credit Counsellors specialize in a broad range of debt management and financial education services. They provide debt management plans so you don’t have to resort to bankruptcy or consumer proposals.

Money Mentors’ debt management plan is called the Orderly Payment of Debts (OPD) program. This is an Alberta debt solution to pay back what you owe, backed by Federal legislation. Are you interested in learning about the OPD program? Check out our article “Is the Orderly Payment of Debts Program Right for You?”

Non-profit vs For-Profit

Another key difference relates to profit incentives. Credit Counsellors at Money Mentors work within a non-profit organization. We aim to address immediate financial issues. We also emphasize education, empowerment, and long-term financial wellness. This non-profit credit counselling model ensures that the advice provided is in your best interest and not to make money.

LITs, while regulated by the federal government, are for-profit. Their main goal is to administer consumer proposals and bankruptcies, resulting in a more transactional relationship.

Want to know more about the pros and cons of Consumer Proposals? Check out our article: The Pros and Cons of a Consumer Proposal in Alberta.

What Makes Money Mentors Counsellors Special?

Money Mentors’ non-profit Credit Counsellors stand out because of their commitment to unbiased financial advice, education, and empowerment. They are not only counsellors. They are also educators and coaches.

Money Mentors understand that your financial situation is unique. That’s why we offer one-on-one debt counselling sessions to help you explore all debt repayment options. In these personalized sessions, our counsellors take the time to understand you and your financial situation. Then we create a customized debt management plan that fits your needs and goals.

Beyond immediate debt management, we provide practical budgeting advice. We also teach clients how to manage their income and expenses. This educational approach ensures that you work your way out of debt. It also helps you gain the skills and knowledge necessary to avoid future money problems.

Here’s what sets us apart:

• Accredited Financial Counsellor Canada Certification: Ensuring expertise in financial counselling and adherence to ethical standards.
• One-on-One Credit Counselling: Personalized financial guidance tailored to your individual needs.
• Budgeting Tips and Skill Building: Empowering you with the tools and knowledge to manage your finances well.
• Orderly Payment of Debts Program: A unique, voluntary program offering a structured, legislated debt repayment solution.
• Community Resources: A network of non-profit partners for extra support.
• Long-Term Coaching: Ongoing, free support to help you achieve your financial goals.

Contacting the Right Debt Help Professional

Key Takeaway: Getting advice from an unbiased, non-profit credit counsellor is the single, most important thing you can do. Credit Counsellors at Money Mentors hold AFCC certification and are committed to finding you the best way out of debt.

Before you make any decisions, equip yourself with as much information as you can; knowledge really is power. Our credit counselling services are completely free of charge and come with no strings attached. That’s the benefit of working with a non-profit; your financial well-being is our goal. Give Money Mentors a call today!

Have questions?

Need more information or want to talk to an accredited financial counsellor for peace of mind? Let us help.
Call 1-888-294-0076 or book an appointment. It’s free for all Albertans.