Tag: debt solutions Canada

MODERNIZING INSOLVENCY: A GUIDE TO THE OFFICE OF THE SUPERINTENDENT OF BANKRUPTCY CANADA’S NEW PROPOSED RULES

Post author By Brandon Smith
Post date February 2, 2026

office of the superintendent of bankruptcy canada

As Brandon Smith, Senior Vice-President of Ira Smith Trustee & Receiver Inc., I understand that dealing with debt can be overwhelming. That’s why I’m here to shed light on important changes happening in the Canadian insolvency space, straight from the Office of the Superintendent of Bankruptcy Canada, sometimes called the OSB. These updates are designed to make debt relief more accessible and efficient for Canadians like you or your company.

Are you feeling stressed by your or your company’s debt? You’re not alone. Many Canadians struggle with financial challenges, and finding a clear path forward can feel impossible. But there’s good news on the horizon. The Office of the Superintendent of Bankruptcy Canada has just released proposed changes to how personal and business debt will be handled. These changes aim to make debt relief more fair, modern, and easier to access for more people.

The official publication of these proposed amendments appeared in the Canada Gazette, Part 1, Volume 159, Number 48, on November 29, 2025. This marks a significant step forward in modernizing Canada’s insolvency system.

We at Ira Smith Trustee & Receiver Inc. are here to explain exactly what the main updates mean for you and your financial future. These aren’t just minor tweaks; they are significant steps to modernize Canada’s insolvency system.

Key Takeaways:

Higher Debt Limits: The proposed changes will raise the maximum debt allowed for consumer proposals and make more bankruptcies eligible for a simpler “summary administration” process. This is good news for debtors, meaning more options for more people.
Digital First: Say goodbye to paperwork headaches! Expect a more streamlined process with electronic documents and signatures, making debt relief quicker and easier to navigate. Canadian debt solutions are going digital!
Fairer Fees for Expert Help: The tariff applicable to Licensed Insolvency Trustee (LIT) fees is being updated for the first time in many years to ensure you continue to receive top-notch, professional guidance. This ensures fair and expert help for all Canadians.
Inflation Proofing: Crucially, new debt limits will be adjusted annually for inflation, so they stay relevant over time and keep pace with the cost of living.
Official Review Completed: The public feedback period on these proposed rules just closed on January 16, 2026, and comments are now published in the Canada Gazette for transparency.

Office of the Superintendent of Bankruptcy Canada Big Changes Ahead for Canadians in Debt: What the OSB’s New Proposed Rules Mean for You

The Office of the Superintendent of Bankruptcy Canada (OSB): Your Guide to Fair Debt Solutions

The Office of the Superintendent of Bankruptcy Canada is a federal government agency that plays a crucial role in Canada’s financial system. Its main job is to oversee the Canadian insolvency system, ensuring that bankruptcies, receiverships, financial restructurings and consumer proposals are handled fairly and legally. Operating as an independent body under Innovation, Science and Economic Development Canada, the Office of the Superintendent of Bankruptcy Canada manages its oversight and administrative responsibilities separately from the federal government.

This involves protecting the rights of both debtors (people who owe money) and creditors (people or companies owed money). The Office of the Superintendent of Bankruptcy Canada is responsible for licensing and regulating all Licensed Insolvency Trustees (LITs) across Canada, setting the rules and guidelines that LITs must follow to ensure professional and ethical conduct.

Think of the OSB as the referee of the debt world. They ensure everyone plays by the regulatory framework rules and that the system works well for all Canadians. This oversight is vital for maintaining public confidence in the integrity and fairness of debt relief processes. They are constantly working to improve the system, and these proposed changes are a big part of that ongoing effort.

Why Change Now? Modernizing Canada’s Debt System

The Canadian insolvency rules haven’t been fully updated in a long time, leading to a system that needed to catch up with modern realities. The world has changed a lot since some of these rules were first put in place, especially regarding technology and the rising cost of living. For example, the last major adjustment to consumer proposal limits was back in 2009, which means the current limits haven’t kept pace with over a decade of inflation.

The Office of the Superintendent of Bankruptcy Canada proposed these changes for several important reasons:

Keep Up with Inflation: The cost of living has gone up significantly since the last updates. Current debt limits didn’t reflect this economic reality, making it harder for many Canadians to get the right kind of debt help they truly needed. The new rules aim to fix this by implementing annual inflation adjustments.
Improve Efficiency: Modern technology offers new ways to make the insolvency process faster, easier, and less burdensome. Moving away from paper-heavy systems to digital solutions will benefit everyone involved.
Ensure Consistency: It’s important that the rules are clear and applied the same way across Canada, no matter where you live. These amendments aim to reduce any inconsistencies and make the system more uniform.
Support LITs: Licensed Insolvency Trustees are vital to the system, providing essential guidance and administration. The updated tariff for fees helps ensure that LITs can continue to provide quality, professional service across the country, maintaining the health of the insolvency ecosystem.
Increase Accessibility: Ultimately, these changes aim to make it simpler for more people to access the debt relief options they need. By raising thresholds and streamlining processes, more Canadians can find a path to a fresh financial start.

The OSB believes these updates will help Canada’s economy and ensure the insolvency system can adapt to today’s needs, providing effective and fair solutions for individuals and businesses alike.

office of the superintendent of bankruptcy canada

Office of the Superintendent of Bankruptcy Canada Major Updates to Consumer Proposals: More Help for More Canadians

One of the key proposed changes to Canadian bankruptcy and insolvency rules by the Office of the Superintendent of Bankruptcy (OSB) in 2025-2026 involves consumer proposals.

What is a Consumer Proposal?

A consumer proposal is a powerful legal agreement between you and your unsecured creditors (like credit card companies, banks, or payday lenders). With the help of a Licensed Insolvency Trustee (LIT), you agree to pay back a portion of what you owe, over a period of up to five years, without any interest. When all your payments are completed, then the balance of your unsecured debt is wiped out too.

It’s an excellent way to consolidate your debts, stop collection calls, freeze interest, and allow you to avoid bankruptcy while keeping your assets. Only a Licensed Insolvency Trustee can help you file and administer a consumer proposal. It’s a formal, legally binding process that offers significant protection and relief.

The Proposed Changes:

One of the most exciting proposed changes is the increase to the maximum debt limit for a consumer proposal.

Current Limit: Right now, your total unsecured debts (not including your mortgage on your main home, as this is a secured debt) cannot be more than $250,000.
Proposed New Limit: The OSB suggests raising this limit significantly to $325,000.

This new limit will also be adjusted every year for inflation. This is a huge step to keep the system fair as costs continue to rise and ensure that the thresholds remain relevant to the economic realities faced by Canadians.

How This Will Affect Canadians with Debt:

This increase means that many more Canadians who are struggling with high levels of unsecured debt will now qualify for a consumer proposal. Before these proposed changes, if your unsecured debt was over $250,000, your options were more limited:

file a Division I Proposal under the Bankruptcy and Insolvency Act (Canada) which is more costly than and not streamlined like a consumer proposal; or
forcing you into bankruptcy even if a proposal was a better fit for your situation.

With the higher threshold, a consumer proposal becomes a viable and often preferable solution for a wider range of people. It gives you the chance to repay a manageable portion of your debt and get a fresh financial start without the full impact of bankruptcy.

Historically, when the limit was raised from $75,000 to $250,000 in 2009, there was a significant increase in the number of consumer proposals filed, helping many more individuals avoid bankruptcy. This new increase is expected to have a similar positive impact, providing a much-needed lifeline to those drowning in debt. It reinforces the idea that there’s good news for debtors: new rules mean more Canadians can access life-changing debt solutions.

Office of the Superintendent of Bankruptcy Canada: What “Summary Administration” Changes Mean for You

The Office of the Superintendent of Bankruptcy Canada’s proposed changes also extend to simplifying the bankruptcy process for many Canadians.

What is Summary Administration Bankruptcy?

In Canada, bankruptcies are generally handled in one of two ways: “summary administration” or “ordinary administration.” Summary administration is a simpler, quicker, and less expensive process designed for people with fewer assets and less complex financial situations. This is the type of bankruptcy most individual Canadians will experience if they choose this path.

Ordinary administration is reserved for more complex cases, often involving businesses or individuals with many assets or intricate financial dealings. The goal of summary administration is to provide an efficient path to debt relief for those who need it most.

The Proposed Changes:

The Office of the Superintendent of Bankruptcy Canada is proposing to raise the asset threshold for summary administration bankruptcies.

Current Limit: A bankruptcy is handled under summary administration if the realizable assets (assets that can be sold for money to pay creditors) are less than $15,000.
Proposed New Limit: The OSB plans to increase this threshold to $20,000 of realizable assets.

Like consumer proposals, this threshold will also be adjusted annually for inflation. This annual adjustment is crucial to ensure the threshold remains relevant as asset values and the cost of living continue to change over time.

How This Will Affect Canadians with Debt:

This change will allow more individuals who file for bankruptcy to go through the simpler, less costly summary administration process. If your realizable assets are below this new $20,000 limit, your bankruptcy will likely be faster and involve fewer steps, making the process less stressful during an already difficult time. It helps ensure that individuals with lower-value estates can still access efficient debt relief without the added complexity and cost of an ordinary administration. This is another example of how the new OSB proposed thresholds will positively affect Canadians with debt, offering a more streamlined path to a fresh start.

office of the superintendent of bankruptcy canada

Office of the Superintendent of Bankruptcy Canada Embracing the Digital Age: Easier Access to Debt Relief

The Office of the Superintendent of Bankruptcy Canada is pushing for modernization, recognizing that in today’s digital world, paper-heavy processes can be slow and frustrating. The OSB’s proposed amendments aim to bring the insolvency system fully into the 21st century.

The Proposed Changes:

Electronic Documents: Licensed Insolvency Trustees will be able to use and send more documents electronically. This includes things like notices, reports, and other required forms, making communication much faster.
Electronic Signatures: You may be able to sign more documents digitally, reducing the need for in-person meetings, printing, scanning, or mailing physical papers. This simplifies the process for debtors and LITs alike.
Electronic File Retention: LITs will be able to keep insolvency files electronically, reducing paper waste, improving organization, and making it easier to access information when needed. This also enhances security and reduces physical storage costs.
Removing Outdated Requirements: Some older rules, like the unnecessary need to get a court seal for certain documents, will be removed. These changes streamline the administrative burden and focus on substance over outdated formality.

What This Means for You:

These changes mean a smoother, faster, and more convenient experience when dealing with your debt. It will make the process more accessible, especially for those in remote areas, with busy schedules, or with mobility challenges. Less paperwork, quicker turnaround times, and potentially fewer in-person visits can significantly reduce stress and make your journey to debt relief more efficient. The OSB is also focusing on cybersecurity, an important part of digital processes, and will consult on new guidelines for LITs in spring 2026 to ensure that all electronic data is handled securely and responsibly. This move embodies the “Say Goodbye to Paperwork Headaches: Canadian Debt Solutions Are Going Digital!” viral hook perfectly.

Office of the Superintendent of Bankruptcy Canada: Understanding Licensed Insolvency Trustee Fees To Ensure a Strong System

The proposed changes also include crucial revisions to the tariff on how Licensed Insolvency Trustee fees are structured, especially for summary administration bankruptcies. This is about ensuring fair and expert help for all Canadians.

The Role of a Licensed Insolvency Trustee (LIT):

Licensed Insolvency Trustees are the only professionals in Canada legally authorized to administer bankruptcies and consumer proposals. We are highly trained experts in debt solutions, regulated by the OSB, and act impartially to help both debtors and creditors. Our role is multifaceted: we provide essential financial counselling, explain all your options (not just bankruptcy), and guide you through every step of the legal process. We ensure that your rights are protected and that the insolvency system functions fairly. Without LITs, Canadians would lack access to these vital, regulated debt relief services.

Why Fee Adjustments?

The fees paid to LITs for administering summary administration bankruptcies are regulated by a tariff which hasn’t been significantly updated since 1998. Think about how much the cost of living and running a business has increased over 25 years! Over these decades, the costs of running an insolvency practice have increased dramatically, and the work involved has become more complex due to legislative changes and technological advancements. Without fair compensation, it becomes challenging to attract and keep skilled professionals in the field, which could ultimately affect the quality and accessibility of services for Canadians in need.

The Office of the Superintendent of Bankruptcy Canada’s proposed revisions aim to:

Ensure Viability: Allow LIT businesses to remain strong and continue serving Canadians effectively across the country, including in smaller communities.
Encourage New LITs: Attract new, bright professionals to the field, ensuring there are enough experts to help people across the country now and in the future.
Maintain Quality Service: Guarantee that debtors continue to receive high-quality, professional, and empathetic assistance during what is often a very vulnerable and stressful time in their lives.

The Proposed Changes to Fees:

For summary administration bankruptcies, the OSB has proposed a new trustee remuneration structure. This structure would involve:

100% of the first $1,700 of the realizable assets.
45% of the remaining value up to a maximum of $20,000 in realizable assets.

It’s important to note that this new structure updates a very old system to better reflect the work and costs involved today. For consumer proposals, LIT fees are usually part of the monthly payments and are approved by the OSB, and these specific proposed changes focus on summary administration bankruptcy fees.

What This Means for You:

While LIT fees are changing, the fundamental commitment to providing you with clear, non-judgmental, and expert advice remains. These adjustments are about ensuring the long-term health of the insolvency system so that reliable, professional help is always available when you need it most. When considering a consumer proposal or bankruptcy, your LIT, like Ira Smith and Brandon Smith at Ira Smith Trustee & Receiver Inc., is legally required to explain all fees upfront during your free consultation. These fee updates are an essential part of “Ensuring Fair & Expert Help: Understanding How LIT Fees Are Changing.”

office of the superintendent of bankruptcy canada

Beyond the Office of the Superintendent of Bankruptcy Canada Rules: What’s Next for Canadian Insolvency?

The proposed changes published in the Canada Gazette, Part 1, Volume 159, Number 48, on November 29, 2025, represent a significant modernization effort by the Office of the Superintendent of Bankruptcy Canada. The public feedback period on these proposed amendments officially closed on January 16, 2026, and the comments received are now publicly available in the Canada Gazette, demonstrating transparency in the process.

While some fee updates only need regulatory approval to take effect, other structural changes, particularly those that require new legal powers or definitions, may necessitate amendments to the Bankruptcy and Insolvency Act itself. This means some changes might be implemented sooner than others. The OSB can also issue Directives to guide Licensed Insolvency Trustees on how to apply the new rules. For example, they might issue guidance on updating how surplus income is calculated. These directives provide practical instructions for LITs to ensure consistent and fair application of the law.

The OSB is also actively working on other initiatives to improve the insolvency system, including finalizing cybersecurity guidelines for LITs to protect sensitive information in an increasingly digital environment. Furthermore, they are providing guidance on how LITs should use artificial intelligence tools responsibly, ensuring that new technologies enhance services without compromising ethical standards or privacy. This ongoing commitment to evolution highlights the OSB’s dedication to a robust, fair, and modern insolvency framework for all Canadians.

Comparison Table: Key Proposed Changes to Office of the Superintendent of Bankruptcy Canada Rules

Here’s a quick look at the major proposed changes and what they mean:

Feature	Current Rules (Approx.)	Proposed New Rules	Impact for Canadians
Consumer Proposal Debt Limit	Up to $250,000 (unsecured debt, excluding principal residence mortgage).	Up to $325,000 (unsecured debt, excluding principal residence mortgage), indexed annually for inflation.	More Canadians qualify for this powerful debt relief option, avoiding bankruptcy while keeping assets.
Summary Bankruptcy Assets	Realizable assets up to $15,000.	Realizable assets up to $20,000, indexed annually for inflation.	Simpler, faster bankruptcy process for more individuals, reducing stress and costs.
LIT Fees (Summary Admin)	Set by tariff, largely unchanged since 1998.	Revised structure: 100% of the first $1,700, then 45% of the remaining value up to $20,000 in assets.	Ensures ongoing access to professional, high-quality LIT services by making the practice viable across the country.
Process Modernization	More paper-based, some outdated requirements (e.g., court seals, physical documents).	Emphasis on digitalization (e-documents, e-signatures, e-records, removal of redundant paper requirements). Cybersecurity guidelines to be finalized.	Faster, more convenient, and accessible debt relief process, especially for remote areas or those with mobility issues.
Consistency	Some inconsistencies in application across regions/between LITs.	Measures to improve consistency in regulatory application and interpretation through clearer rules and directives from the OSB.	Clearer, more uniform application of insolvency laws across Canada, leading to fairer outcomes.
Inflation Adjustment	Debt limits were static for many years, falling behind economic realities.	Annual indexing for inflation for both consumer proposal debt limits and summary administration asset thresholds.	Ensures the system remains fair and relevant to the current cost of living for years to come.

office of the superintendent of bankruptcy canada

Office of the Superintendent of Bankruptcy Frequently Asked Questions (FAQ) Section

Q1: What are the key proposed changes to Canadian bankruptcy and insolvency rules by the Office of the Superintendent of Bankruptcy Canada (OSB) in 2025-2026? A1: The key proposed changes by the Office of the Superintendent of Bankruptcy Canada fall into four main categories: promoting digitalization and accessibility, ensuring consistency in rules, increasing the debt thresholds for consumer proposals and summary administration bankruptcies, and revising the fees for Licensed Insolvency Trustees (LITs). These changes aim to modernize the system, account for inflation, and make debt relief more accessible and efficient for Canadians.

Q2: How will the new Office of the Superintendent of Bankruptcy Canada’s proposed thresholds for consumer proposals and summary administration bankruptcies affect Canadians with debt? A2: The proposed changes will significantly benefit Canadians with debt. The maximum unsecured debt for consumer proposals is set to increase from $250,000 to $325,000, allowing more individuals with higher debt to access this powerful option and avoid bankruptcy. Similarly, the asset threshold for summary administration bankruptcies will rise from $15,000 to $20,000, making the bankruptcy process simpler and faster for a greater number of people. Both thresholds will also be adjusted annually for inflation, ensuring their ongoing relevance.

Q3: When will the Office of the Superintendent of Bankruptcy Canada’s proposed changes to insolvency rules, including LIT fees and digitalization, take effect? A3: The proposed amendments have been published in the Canada Gazette, Part I, Volume 159, Number 48, on November 29, 2025, and the public consultation period for feedback concluded on January 16, 2026. While the specific effective date for all changes is not yet final, regulatory approval is needed for fee updates, and some structural changes might require legislative amendments to the Bankruptcy and Insolvency Act. The OSB can also issue directives to guide implementation, meaning different aspects may come into force at different times.

The recent changes by the Office of the Superintendent of Bankruptcy Canada aim to keep the insolvency system effective and accessible, not to increase costs for individuals dealing with debt. While Licensed Insolvency Trustee fees for summary bankruptcies will be adjusted to reflect current expenses, the changes primarily support the professionals providing these essential services.

The recent changes by the Office of the Superintendent of Bankruptcy Canada aim to maintain an effective and accessible insolvency system rather than increase costs for individuals dealing with debt. While Licensed Insolvency Trustee fees for summary bankruptcies are being adjusted to reflect current expenses, the focus is on supporting professionals providing essential services.

The changes by the Office of the Superintendent of Bankruptcy Canada aim to maintain an effective and accessible insolvency system rather than increase costs for debtors. While Licensed Insolvency Trustee (LIT) fees for summary bankruptcies are being adjusted to align with current costs, the adjustments support professionals providing essential services.

The recent changes by the Office of the Superintendent of Bankruptcy Canada aim to keep the insolvency system effective and accessible, rather than increase costs for individuals dealing with debt. Although Licensed Insolvency Trustee fees for summary bankruptcies are being adjusted to reflect current expenses, the focus is on supporting professionals who provide these essential services.

Q4: Will these Office of the Superintendent of Bankruptcy Canada changes make it more expensive to deal with my debt? A4: The goal of these changes is to ensure the insolvency system remains effective and accessible, not necessarily to make it more expensive for you. While LIT fees for summary bankruptcies are being adjusted after many years to reflect current costs, these changes are aimed at supporting the professionals who provide these vital services.

A Licensed Insolvency Trustee will always discuss all fees with you upfront during your free, no-obligation consultation. The increased thresholds for consumer proposals may actually save you money by allowing you to choose a more suitable and often less costly debt solution, like a consumer proposal, instead of a more complex or impactful bankruptcy.

Q5: What are the benefits of digitalization in the insolvency process according to the Office of the Superintendent of Bankruptcy Canada? A5: Digitalization will make the debt relief process faster, more convenient, and more accessible for everyone involved. It will allow for electronic document submission, e-signatures, and digital record keeping, significantly reducing paperwork and streamlining administration. This can reduce stress, cut down on travel and printing costs, and make your journey to debt relief more efficient and easier to navigate from anywhere in Canada.

Office of the Superintendent of Bankruptcy Canada Brandon’s Take: A New Horizon for Debt Relief in Canada

As Senior Vice-President of Ira Smith Trustee & Receiver Inc., I’ve seen firsthand the toll that debt can take on companies, individuals and families. These proposed changes from the Office of the Superintendent of Bankruptcy Canada are truly a breath of fresh air. For too long, our insolvency system has needed an update to reflect the realities of modern life and the pressures of inflation. It’s an affirmation of our shared commitment to helping Canadians rebuild their financial lives.

The increase in thresholds for both consumer proposals and summary administration bankruptcies is a game-changer. It means that more Canadians will have access to effective debt relief options that are tailored to their specific situations, rather than being forced into less ideal solutions simply because of outdated limits. The commitment to annual inflation adjustments is particularly welcome, as it ensures these programs will remain relevant and fair for years to come, adapting as our economy evolves.

Furthermore, the move towards digitalization isn’t just about efficiency; it’s about accessibility. Making the process simpler and less burdensome can significantly reduce the stress associated with seeking debt solutions. It reflects a forward-thinking approach that embraces technology to better serve the public.

My team and I at Ira Smith Trustee & Receiver Inc. believe these amendments will strengthen the Canadian insolvency system, making it more robust and responsive to the needs of those struggling with financial challenges. It’s a clear signal that the system is evolving to offer better support and a clearer, more efficient path to a fresh financial start. We are excited about these changes and what they will mean for our clients.

Don’t Face Your Debt Alone: Contact Ira Smith Trustee & Receiver Inc. Today

Understanding these new rules and how they apply to your specific situation can be complex. You don’t have to navigate these changes or your debt problems on your own. At Ira Smith Trustee & Receiver Inc., we are Licensed Insolvency Trustees, and our expertise is helping Canadians just like you find the best path out of debt. We are uniquely qualified to administer consumer proposals and bankruptcies, and we stay on top of all the latest changes from the Office of the Superintendent of Bankruptcy to ensure you receive the most current and effective advice.

We offer a free, no-obligation consultation where we can discuss your unique financial situation, explain all your options – including how these new proposed rules might benefit you – and help you choose the debt solution that makes the most sense for your future. Our approach is professional, empathetic, and always non-judgmental. We are here to listen without judgment and provide clear, actionable solutions tailored to your needs.

Take the first step towards a debt-free life. The sooner you reach out, the sooner we can help you start fresh. Our experienced team is ready to provide the guidance and support you deserve.

Don’t let financial uncertainty dictate your future. If you or your business is struggling with debt, losing sleep, or facing the possibility of legal action, contact Ira Smith Trustee & Receiver Inc. today. We offer a free, confidential consultation to discuss your situation, explain your options in plain language, and help you develop a clear, actionable plan. Our team of Licensed Insolvency Trustees is dedicated to providing the compassionate, professional support you need to regain control and achieve a debt-free life. Take the first step towards a brighter financial future – call us now.

Ira Smith Trustee & Receiver Inc. is licensed by the Office of the Superintendent of Bankruptcy and is a member of the Canadian Association of Insolvency and Restructuring Professionals.

Phone: 905.738.4167
Toronto line: 647.799.3312
Website: https://irasmithinc.com/
Email: brandon@irasmithinc.com

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Disclaimer: This analysis is for educational purposes only and is based on the cited sources and my professional expertise as a licensed insolvency trustee. The information provided does not constitute legal or financial advice for your specific circumstances.

Every situation is unique and involves complex legal and factual considerations. The outcomes discussed in this article may not apply to your particular situation. Situations are fact-specific and depend on the particular circumstances of each case.

Please contact Ira Smith Trustee & Receiver Inc. or consult with qualified legal or financial professionals regarding your specific matter before making any decisions.

About the Author:

Brandon Smith is a Senior Vice-President at Ira Smith Trustee & Receiver Inc. and a licensed insolvency trustee serving clients across Ontario. With extensive experience in complex court-ordered receivership administration and corporate insolvency & restructuring proceedings, Brandon helps businesses, creditors, and professionals navigate challenging financial situations to achieve optimal outcomes.

Brandon stays current with landmark developments in Canadian insolvency law. He brings this cutting-edge knowledge to every client engagement, ensuring his clients benefit from the most current understanding of their rights and options.

office of the superintendent of bankruptcy canada

Tags Bankruptcy and Insolvency Act, Canada Gazette changes, Canadian insolvency law changes, consumer proposal limits, corporate insolvency, debt relief canada, debt solutions Canada, Innovation Science and Economic Development Canada, insolvency system, Ira Smith Trustee, licensed insolvency trustee, licensed insolvency trustee fees, Office of the Superintendent of Bankruptcy, Office of the Superintendent of Bankruptcy Canada, OSB Canada updates, public confidence, summary administration bankruptcy

Brandon Blog Post

A CANADA TRUSTEE’S COMPLETE VIEW OF CANADA’S ‘TWO-SPEED’ ECONOMY: WHY CONSUMER INSOLVENCIES ARE SOARING WHILE CORPORATIONS AREN’T

Post author By Brandon Smith
Post date September 15, 2025

Canada trustee

The economy, much like a highway during rush hour, can move at different speeds. For some, it’s a smooth, open road. For others, it’s a gridlock of financial stress and mounting debt. As a Canada Trustee, I just read the new 2024-25 Annual Report from the Office of the Superintendent of Bankruptcy (OSB). It shows that Canada’s economy is looking more and more like this “two-speed” highway.

On one side, we have everyday Canadians and small businesses facing a significant increase in financial trouble requiring help with debt solutions. On the other hand, large corporations appear to be cruising along, handling economic bumps with ease. This striking difference is at the heart of the OSB’s 2024-25 Annual Report. It tells a powerful story about why more people are struggling and what the country’s official insolvency watchdog is doing about it.

This blog post will explore the key findings of the report, dive into the reasons behind this two-speed economy, and explain the important role of a Canada Trustee in helping people navigate these challenging times.

The Numbers Tell the Story: A Tale of Two Economies

The most surprising and important finding in the OSB’s report is the clear split between consumer and corporate financial health. The numbers don’t lie.

First, let’s look at the side of the road where most people are stuck: the world of consumer debt.

The OSB accepted 143,864 insolvency filings in the 2024-25 fiscal year.
This represents a notable increase of 7.6% from the year before.

To put this into perspective, an insolvency filing is when an individual or a small business officially asks for help with their debts, usually through a bankruptcy or a consumer proposal. Both these administrations occur under the Canadian Bankruptcy and Insolvency Act (BIA). A 7.6% jump in one year is a significant red flag. It points to a growing number of Canadians who are feeling the squeeze and can no longer keep up with their financial commitments.

Now, let’s look at the other side of the highway, where the big companies are. The OSB also tracks filings under the Companies’ Creditors Arrangement Act (CCAA). The CCAA is a law used by large corporations that need to restructure and reorganize their business when they are in serious financial trouble.

There were only 70 CCAA filings in 2024-25.
This is actually a decline of 2.8% from the previous year.

This is the core of the “two-speed” economy. The number of everyday people needing help is climbing fast, while the number of big companies in distress is going down. This trend suggests a Canada where financial stability depends heavily on your size. If you are a large, well-established company, you have been able to navigate recent economic challenges. But if you’re an individual, a family, or a small business, the ride has been much bumpier.

Why Are More Canadians Drowning in Debt?

The OSB report doesn’t go into a deep analysis of the “why” behind these numbers, but it points to some key factors that are widely recognized as the main drivers of financial stress. These are not new headlines, but their combined effect has been felt more deeply this year.

Inflation and the Rising Cost of Living: We’ve all felt it at the grocery store, the gas pump, and in our monthly bills. Inflation means that our money doesn’t go as far as it used to. For many families, this has made it harder and harder to afford the necessities of life. When prices for food, housing, and transportation keep climbing, it leaves less money for everything else, making it difficult to pay off existing debts.
High Interest Rates: Over the past couple of years, central banks have raised interest rates to try and control inflation. While this is a necessary step for the economy, it has a direct and painful effect on anyone with a mortgage, car loan, or credit card debt. Higher interest rates mean that more of your money goes toward interest payments and less goes toward paying down the actual debt. This can turn a manageable debt load into an impossible one very quickly. A higher interest rate on a mortgage can add hundreds, or even thousands, of dollars to a person’s monthly expenses, putting immense pressure on their budget.

When you combine these two factors, you get the perfect storm for consumer financial distress. A family might be earning the same income, but their expenses are higher, and the cost of servicing their debt is higher. Something has to give, and for many, that “something” is their ability to stay on top of their financial obligations. It’s a situation where hard work and careful budgeting are simply not enough to keep up with the rising costs. This is often the point where people begin to look for solutions and seek the help of a Canada Trustee.

Why Are Big Companies Staying Afloat?

The other half of the story is why large corporations seem to be faring so much better. While the OSB report does not provide a detailed explanation for this, we can draw some logical conclusions based on the nature of a large business.

Large companies are often more resilient to economic headwinds than small businesses or individuals. They have some advantages that help them ride out the storm:

Financial Resources: Large corporations typically have significant cash reserves and better access to credit. This means they can absorb higher costs and interest rates more easily. They can borrow money at lower rates and for longer terms than an individual.
Diversification: Many big companies operate in multiple industries or regions. If one part of their business is struggling, another part might be thriving, helping to balance things out.
Ability to Absorb Costs: Large companies have more power to pass along increased costs to their customers without losing them. They also have the resources to find ways to cut costs in their own operations, such as by streamlining processes or using new technology.

This creates a clear imbalance. While a single person might be overwhelmed by a credit card payment jump of $50, a large corporation can absorb an increase of millions of dollars in interest payments without having to file for protection. The system is designed to allow large corporations to handle big economic swings, but it leaves individuals and small businesses much more exposed. This is why the role of a Canada Trustee becomes so crucial.

Introduction: Understanding the Role of a Trustee in Canada

The OSB’s report mentions that a Canada Trustee is a key figure in the country’s insolvency system. But what exactly are licensed insolvency trustees, and what do they do? The term “trustee” is used to describe a professional who holds property and acts on behalf of others. This role is a foundation of Canada’s legal and financial system.

What is a Canada Trustee? Defining the Core Concept

Licensed Insolvency Trustees are federally regulated professionals. They help people and businesses with serious debt problems. They are the only professionals allowed to handle insolvencies in Canada. The OSB report shows they play a key role during financial hardship. They act as a link between a person in debt and their creditors. The person who gives the property to the trustee is called in this case, a bankrupt.

The Foundation of Trust: Legal Framework and Fiduciary Duty

The most important part of being a Canada Trustee is the “fiduciary duty.” The word “fiduciary” comes from a Latin word that means “trust,” and this is the core of the relationship. A trustee has a legal and moral obligation to always act with honesty, loyalty, diligence, and prudence. They must put the interests of the beneficiaries or creditors ahead of their own. This means they must avoid any personal conflicts of interest and not try to profit from their role. The trustee must also be ready to account for everything they do, keeping accurate records of all financial transactions concerning the trust property.

Why Canada Trustees are Essential in the Canadian Landscape

Trustees are an essential part of the Canadian legal landscape because they provide a way for someone to manage important assets or affairs for another person, especially if that person is unable to do so themselves. A trustee can be appointed in a will, chosen through a separate trust document, or appointed by a court. For instance, a trustee can be appointed to manage an inheritance for a minor or to handle the finances of an adult who is no longer capable of making their own decisions and handling their financial situation on their own.

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The Diverse Landscape of Trusteeship in Canada

While the blog focuses on the Licensed Insolvency Trustee, it’s important to know that the term “trustee” covers a wide range of roles in Canada.

Licensed Insolvency Trustees (LITs): Navigating Financial Hardship

This is the specific type of Canada Trustee that the OSB report focuses on. A Licensed Trustee is a professional who specializes in helping individuals and businesses with serious debt problems. They are the only professionals legally authorized to administer insolvencies in Canada. As the OSB report shows, they play a critical role in times of financial hardship, acting as a link between a person in debt and their creditors.

Estate Trustees (Executors): Stewarding Legacies

An Estate Trustee, often called an executor, is a person named in a will to manage and settle the affairs of someone who has died. Their duties are numerous, including making funeral arrangements, locating all of the deceased’s assets, paying off any debts and taxes, and finally, distributing what is left to the beneficiaries as directed by the will.[8, 9] It is a legally demanding role that requires careful attention to detail.

The Public Guardian and Trustee (PGT): Protecting Vulnerable Interests

Each province has a Public Guardian and Trustee, a government office created to protect the legal and financial interests of the most vulnerable people in society.[10, 11, 12, 13] The PGT acts as a trustee of last resort when there is no trusted family or friend available to do so.[10, 13] This includes protecting the interests of mentally incapable adults, children under a certain age, and deceased or missing persons when no one else can administer their estate.

Professional Trustees and Trust Companies: Specialized Asset Management

For those with large or complex estates, or when family conflicts are a concern, a professional trustee or trust company can be appointed to handle the trust property. These are professional fiduciaries—often a trust department of a bank or a private trust company—that are fully staffed with experts in law, taxes, and finance. They offer expertise and impartiality and can take on the day-to-day work of managing a trust.

Judicial Trustees: Court-Appointed Oversight

In some cases, a court may appoint a judicial trustee.] This happens when a person with mental or physical challenges needs help with their finances, and there is no one else to step in. A judicial trustee is authorized by the court to manage a person’s money and property, ensuring their bills are paid and their needs are met.

Core Responsibilities and Fiduciary Duties of a Trustee

Regardless of the type, every Canada Trustee is held to a high standard of conduct and has specific duties that are legally binding.

The Paramount Fiduciary Duty: Acting in the Best Interest of Beneficiaries/Creditors

An Estate Trustee, also called an executor, is named in a will to manage and settle a deceased person’s affairs. Their duties include making funeral arrangements, finding all assets, paying debts and taxes, and distributing what is left to beneficiaries as the will directs. This role requires careful attention to detail. The licensed trustee firm, Ira Smith Trustee & Receiver Inc., also acts as a court-appointed independent Estate Trustee.

Prudent Management of Trust Property and Assets

A Canada Trustee has a duty to manage and invest the assets they control responsibly and prudently. This means they must make informed decisions and act as a careful person would in similar circumstances. They must avoid risky or speculative investments and must treat all beneficiaries fairly.

Legal Compliance and Regulatory Adherence

A trustee must always follow the law. This can be complex, as a Canada Trustee must comply with a range of federal and provincial laws, as well as the terms of any will or trust document. For example, an Estate Trustee must ensure that all debts and taxes are paid before distributing assets, or they could face personal liability. In Ontario, the Trustee Act comes into play.

Reporting, Disclosure, and Accountability

A trustee must keep detailed and accurate records of all transactions and be ready to show these to the beneficiaries at any time. This “duty to account” is a crucial part of their role, ensuring that they are transparent and accountable for their actions. If a trustee fails in their duties, they can be removed by the court and ordered to pay for any losses.

Trustee Remuneration: Compensation for Services Rendered

Trustees are entitled to be paid for their services.] How much they are paid is usually determined by the will or trust document, or if not specified, it is decided by provincial law or the court. For example, the Public Guardian and Trustee of British Columbia charges prescribed fees for their services, typically ranging from 3% to 5% of the estate’s value.

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Navigating Financial Challenges: How Trustees Provide Debt Relief

As the OSB report highlights, the need for debt relief is growing. This is where the Licensed Insolvency Trustee becomes the most relevant kind of Canada Trustee for many people.

Understanding Financial Difficulties and Debt Problems

The first step in seeking help is acknowledging the problem. The OSB report shows that more Canadians are facing a financial gridlock due to factors like high interest rates and the rising cost of living. When you find yourself unable to pay your bills, a Licensed Insolvency Trustee is the professional to consult.

Options for Individuals: Consumer Proposals and Personal Bankruptcy

While consumer credit counselling can help many Canadians manage their debts, sometimes your financial situation requires more powerful legal solutions. When your debt load exceeds what you can realistically repay through traditional methods, consumer proposals and personal bankruptcy offer legal protection and genuine fresh starts.

As a Licensed Insolvency Trustee serving the Greater Toronto Area, I help people understand when these formal insolvency options become necessary alternatives to credit counselling. These government-regulated processes can eliminate or significantly reduce your debts while protecting you from creditor actions – something that consumer credit counselling services cannot legally provide.

If you’re facing overwhelming debt that exceeds 40% of your annual income, dealing with aggressive collection actions, or finding that minimum payments aren’t making a real dent in your balances, it may be time to explore these more comprehensive debt relief solutions that only Licensed Insolvency Trustees can administer:

Consumer Proposals: A consumer proposal is a legally binding offer to your creditors to pay back a portion of what you owe over a set period (up to five years).
Personal Bankruptcy: This is a legal process that allows you to be released from your debts and get a fresh financial start.

A Licensed Insolvency Trustee ensures that your rights are protected throughout these processes.

Corporate Insolvency and Restructuring

Beyond personal debt, a Licensed Insolvency Trustee also plays a key role in helping businesses that are in financial trouble. They can help companies reorganize and restructure their debt, which can save the business and its jobs. The OSB report’s mention of a decline in corporate filings suggests that this part of the economy is holding steady, but the service remains critical for businesses in distress.

Choosing the Right Canada Trustee for Your Specific Needs

The type of Canada Trustee you need depends entirely on your situation. Knowing who to turn to is the first step toward finding a solution.

When to Consult a Licensed Insolvency Trustee

You should consult a Licensed Insolvency Trustee when you are facing debt problems that you cannot solve on your own. They are the only ones who can legally help you with options like a consumer proposal or bankruptcy. A consultation with an LIT is free and will help you understand your situation and your legal options without any obligation.

When to Plan for an Estate Trustee/Executor

This is a step you should take when you are planning your will. Naming a trustworthy and competent person or company as your Estate Trustee is crucial for ensuring that your wishes are carried out and your beneficiaries are protected.

When the Public Guardian and Trustee May Be Involved

The PGT is an office of last resort. This means you should only expect them to be involved if there is no other suitable person to act as a trustee for a vulnerable individual or an estate. If you are worried about a family member who needs help, but no one is available to act, you can contact the PGT’s office.

When to Engage a Professional Trustee or Trust Company

A professional trustee is a good choice if you have a large and complex estate, or if you anticipate conflicts between family members after your death. They can provide professional expertise and impartiality, which can save a lot of stress and family disputes in the long run.

Key Factors in Trustee Selection

When choosing any type of Canada Trustee, remember to consider factors beyond just a personal relationship. Trustworthiness is a given, but you should also look for someone with the right skills, knowledge of tax and legal requirements, and the ability to act prudently and impartially.

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Regulatory Oversight and Professional Standards for Canadian Trustees

The different types of trustees in Canada are held accountable by various regulatory bodies and legal frameworks, ensuring they maintain high professional standards.

Licensed Insolvency Trustees (LITs): As the OSB report makes clear, LITs are strictly regulated by the Office of the Superintendent of Bankruptcy. The OSB conducts office visits, initiates compliance actions, and launches professional conduct investigations to ensure that LITs are following all the rules.
Estate Trustees: The duties of an Estate Trustee are regulated by provincial laws and overseen by the courts. If a trustee fails in their duties or mismanages an estate, the courts can remove them and hold them personally responsible for any losses.
Public Guardian and Trustee (PGT): These are government-appointed roles, and their authority and duties are set out in provincial laws.] They are held to the highest ethical and legal standards.
Trust Companies: Trust companies, which are often a part of a bank, are highly regulated entities.[16] They are regulated at the federal level by organizations like the Financial Consumer Agency of Canada (FCAC) and the Office of the Superintendent of Financial Institutions (OSFI).

Canada Trustee Conclusion

The OSB’s 2024-25 Annual Report shows that Canada’s economic reality is difficult for a growing number of people. In this “two-speed” economy, the role of a trusted professional like a Canada Trustee is more important than ever. Whether you need help with debt, are planning your will, or are a family member of a vulnerable person, knowing who these professionals are and how they can help is the first step toward securing your financial future.

The path to financial freedom in Canada’s current economic climate may be challenging, but it is not impossible. With the right information, a clear plan, and professional guidance, you can overcome your cost-of-living and debt challenges and move towards a more secure and hopeful financial future.

You’re not alone in this. There’s a path forward, and it starts with reaching out for the right kind of help. Take that step—you deserve it. If you’re a GTA resident dealing with overwhelming debt, don’t wait for your credit situation to get worse. As a licensed insolvency trustee serving Toronto, Mississauga, Brampton, Markham, and surrounding areas, I’m here to help you understand your debt relief options.

Free consultation available:

No obligation to proceed
Complete review of your debt and credit situation
Clear explanation of how debt relief options affect your Equifax credit score
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

As a licensed insolvency trustee serving the Greater Toronto Area, I encourage consumers and business owners to view financial difficulties not as failures but as challenges that can be addressed with proper guidance. By understanding the warning signs of insolvency and seeking professional advice early, many people and businesses can find a path forward – whether through restructuring, strategic changes, or in some cases, an orderly wind-down that protects their future opportunities.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

At the Ira Smith Team, we understand the financial and emotional components of debt struggles. We’ve seen how traditional approaches often fall short in today’s economic environment, so we focus on modern debt relief options that can help you avoid bankruptcy while still achieving financial freedom.

The stress of financial challenges can be overwhelming. We take the time to understand your unique situation and develop customized strategies that address both your financial needs and emotional well-being. There’s no “one-size-fits-all” approach here—your financial solution should be as unique as the challenges you’re facing.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc., and any contributors do not assume any liability for any loss or damage.

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