Yes, you can theoretically change your Licensed Insolvency Trustee (LIT) in Canada, but it is an extremely difficult and rare process. It requires official court approval, OSB notification, and paying all outstanding administrative fees to your current trustee.
When you file for bankruptcy or a consumer proposal in Canada, you must work with a Licensed Insolvency Trustee (LIT). Many people mistakenly believe an LIT is their personal lawyer. In reality, an LIT is an officer of the court whose job is to balance your rights with the rights of your creditors. Because of this neutral role, disagreements and friction can sometimes arise between the debtor and the trustee.
If the relationship completely breaks down, you might wonder if you can simply “fire” your LIT and hire a new one. 🚫 Unlike changing a private lawyer or an accountant, swapping your trustee mid-process is incredibly complex. Under the federal Bankruptcy and Insolvency Act (BIA), you cannot simply walk away or switch firms without formal legal authorization.
Changing an LIT requires a legal mechanism known as “Substituting a Trustee.” Because the current trustee is legally bound to administer your estate until they are officially discharged by the court, you must follow a rigid administrative process to transfer your file. This often involves paying thousands of dollars in fees before a new trustee will even consider taking your case.
Step-by-Step Process to Change Your LIT in Canada
Whether your insolvency file is being handled in Montreal at the Cour supƩrieure or in Ottawa at the Superior Court of Justice, the federal requirements to substitute a trustee remain the same. If you are determined to change your LIT, here is the standard procedure.
Step 1: Attempt to Resolve the Dispute Internally
Before attempting a formal transfer, try to resolve the issue with your current firm. Often, communication breakdowns happen with junior estate managers rather than the actual LIT. Request a direct meeting with the licensed trustee named on your file to air your grievances. Most firms prefer to fix the problem rather than go through a messy transfer.
Step 2: Contact the OSB for Mediation
If internal resolution fails, your next step is to file a formal complaint with the Office of the Superintendent of Bankruptcy (OSB). 📞 The OSB regulates all trustees in Canada. They can review your case and may offer mediation to resolve the dispute. However, the OSB will not simply assign you a new trustee; they only investigate breaches of professional conduct or BIA regulations.
Step 3: Find a Substitute Trustee
If you decide to proceed with the change, you must find a new LIT who is willing to take over your file. This is often the hardest step. Most trustees are highly reluctant to take on half-finished bankruptcies or proposals because they inherit the previous trustee’s administrative mess and liabilities. You must secure a firm agreement from a new LIT before moving forward.
Step 4: Apply to the Bankruptcy Court and Pay Fees
Once a new trustee agrees to take your file, a formal application must be made to the bankruptcy court to approve the substitution. Crucially, your original trustee will file a “Taxation of Accounts.” 💵 This is an itemized bill for all the work they have done so far. You must pay this outstanding balance in full before the court will allow the file to be transferred to the new firm.
How Much Does it Cost in Canada?
Firing your LIT is an expensive endeavour. You will be responsible for compensating the original trustee for their time, plus paying the new trustee to finish the job.
| Expense Type | Estimated Cost (CAD) |
|---|---|
| Original LIT’s Taxation of Accounts | $1,000 to $3,000+ (Depends on work completed) |
| Court Application Fee | Approx. $50 to $150 (Varies by provincial court) |
| New LIT’s Retainer | $1,500+ (New trustees often require upfront payment) |
| OSB Mediation | Free (Government service) |
How Long Does the Process Take?
Changing your trustee will significantly delay your path to becoming debt-free. Attempting to resolve the dispute internally or through OSB mediation can take 30 to 60 days. If the OSB investigates a formal complaint, it may take several months.
If you secure a new trustee, the actual court process for substituting the LIT and getting the original accounts taxed by the registrar usually takes 3 to 6 months. 📅 During this waiting period, your current insolvency process (and any scheduled discharges) may be completely stalled.
Frequently Asked Questions (FAQ)
Can I just cancel my bankruptcy instead?
No. Once a bankruptcy is legally filed, you cannot simply “cancel” it or walk away. The only way to reverse a bankruptcy is to apply to the court for an annulment, which usually requires paying all your creditors in full, plus the trustee’s fees. It is an extremely rare and expensive legal maneuver.
Will the OSB assign me a new LIT automatically?
No. The Office of the Superintendent of Bankruptcy does not provide trustees to debtors. It is your sole responsibility to find a new licensed firm willing to take on your existing file, which can be very difficult.
What if my LIT retires or their firm closes?
If your trustee retires, passes away, or their firm goes out of business, you do not have to worry about finding a replacement. In these administrative scenarios, the OSB steps in and automatically transfers all active files to another licensed firm at no additional cost to you.
Can I withhold my monthly payments if I am angry with my LIT?
Absolutely not. Withholding your required bankruptcy or proposal payments is a breach of your duties under the BIA. If you stop paying, your LIT can oppose your discharge or have your consumer proposal annulled. This would remove your legal protection and allow creditors to immediately resume collections and wage garnishments.
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