If you’re exploring debt relief options like a consumer proposal or bankruptcy, you’ve likely discovered the term ‘Licensed Insolvency Trustee (LIT)‘. As the only professionals in Canada legally authorized to administer these formal debt relief processes, LITs play a vital role in helping individuals get back on their feet financially. One of the most common questions people ask when considering a proposal or bankruptcy is: “how does a Licensed Insolvency Trustee get paid?” In this article, we’ll walk through what happens behind the scenes – who pays, how payment works, and why the system is designed for fairness and transparency.
Who pays the Licensed Insolvency Trustee?
Here’s the good news: you don’t need to pay your Licensed Insolvency Trustee upfront out of pocket.
Whether you’re filing for bankruptcy or a consumer proposal, the cost of working with a LIT is built into the process itself. Payments to the Licensed Insolvency Trustee are taken from:
- Your monthly payments (in a consumer proposal), or
- The proceeds of your estate (in a bankruptcy).
This means your creditors indirectly pay the LIT, not you.
“We’re often asked if we charge upfront fees – the answer is no. Our fees are built into the repayment plan or bankruptcy estate and regulated by the government. It’s all about keeping things fair and transparent for everyone.”
— Gillian Goldblatt, Licensed Insolvency Trustee and Partner at Spergel
How are Licensed Insolvency Trustees’ payments structured?
LIT compensation isn’t set by the Trustee – it’s governed by the federal government of Canada via the Bankruptcy and Insolvency Act (BIA). In most cases:
- Consumer proposal fees follow federal guidance, typically 20% of what creditors receive, as set out in Directive 13R7.
- Bankruptcy fees follow formulas under Directive 11R2 and are reviewed and approved by the Government of Canada, Office of the Superintendent of Bankruptcy (OSB).
This ensures:
- Transparency – you’ll see a clear breakdown of how much is being paid and to whom.
- Consistency – fee structures are the same across Canada.
- Fairness – there’s no incentive for Licensed Insolvency Trustees to charge more or push you toward a specific solution.
When does a Licensed Insolvency Trustee get paid?
Licensed Insolvency Trustees are paid as they perform their duties, not in a lump sum. For example:
- In a consumer proposal, they receive a portion of each monthly payment you make.
- In a bankruptcy, they’re paid from funds collected through the estate or any required income contributions.
This staged compensation reflects the various services a Trustee provides throughout the process – from assessing your financial situation to distributing funds to creditors and offering mandatory counselling.
What do Licensed Insolvency Trustees get paid for?
Trustees are responsible for a wide range of regulated duties, including:
- Reviewing your finances and advising on your best option
- Preparing legal documents and filing with the OSB
- Communicating with your creditors on your behalf
- Administering your payments and filing reports
- Delivering two government-mandated credit counselling sessions
These services are not optional – they’re required under Canadian insolvency law, and 100% of consumer proposals and bankruptcies must be filed through a Licensed Insolvency Trustee.
In 2024, Canada saw the highest number of consumer insolvencies in 15 years, with 137,295 filings — a rise of 11.4% over 2023. That averages to more than 375 insolvencies per day, highlighting just how many Canadians are turning to Licensed Insolvency Trustees for help amid growing financial pressure.
— CAIRP, February 2025
Why is the fee structure important?
With debt levels continuing to rise in Canada, clear and regulated fee structures help ensure that vulnerable individuals aren’t exploited by unlicensed debt consultants.
As of Q4 2024, the average Canadian household owes $1.76 for every $1 of disposable income – one of the highest debt-to-income ratios in the G7.
— Statistics Canada
In this environment, it’s more important than ever that professional help remains both accessible and transparent.
Consumer proposals: a growing choice
Over 79% of all consumer insolvencies in Canada are now consumer proposals – not bankruptcies.
— CAIRP, 2025
Why? Because consumer proposals offer more flexibility and, crucially, don’t require you to pay anything extra to your Licensed Insolvency Trustee beyond your agreed monthly repayment. The Trustee’s fee is automatically factored in as part of the payment plan. Learn more about the advantages of filing a consumer proposal.
Can I trust that the fees are fair?
Yes. Licensed Insolvency Trustees in Canada are held to some of the highest professional and ethical standards in the debt relief industry.
- They’re licensed and overseen by the Office of the Superintendent of Bankruptcy.
- Their fees are regulated by law – not based on commission or sales.
- They must provide a detailed breakdown of costs before you commit to anything.
Most LITs, including Spergel, also offer free initial no-obligation consultations, so you can get a clear understanding of your options before taking action.
Final thoughts
Licensed Insolvency Trustees don’t get paid unless they’re helping you through a government-regulated process like a bankruptcy or consumer proposal. Their fees are fair, consistent, and clearly laid out – and best of all, they’re already included in your monthly payments or bankruptcy estate. No surprises. No pressure.
If you’re struggling with debt, you don’t have to go it alone – and you don’t have to worry about hidden fees, either.
At Spergel, our team of Licensed Insolvency Trustees has helped over 100,000 Canadians move forward with confidence. We offer clear, honest advice – and we’ll walk you through your options with no hidden costs. Book your free consultation today, and take the first step toward a debt-free future.
