Division 1 Proposal

February 13th, 2007 by Questions

I have read on here that it is difficult for a Self Employed person to have a consumer proposal excepted versus an employed person? I am in financial trouble due to a combination of Job Loss – Business Failure and relationship breakdown. A real mess. I owe alot of money – over $400K unsecured and I am a discharged bankrupt from 1995 and do not want to go bankrupt again. If I offered 15 cents on the dollar over 5 years versus a bankruptcy that showed they might get nothing – what do you think my chances are? I understand that a Div 1 proposal forces you into Bankruptcy if the creditors vote it down? Any suggestions appreciated and Thanks for the helpful site.


One Response to “Division 1 Proposal”

, Barton Goth, GCO, Bankruptcy Trustees said:

Whether or not a proposal will be accepted by your creditors is not solely a function of recovery offered. Firstly, the recovery is always measured in comparison to the recovery that the creditors would receive in a bankruptcy. Essentially one of the functions of the proposal is to offer the creditors sufficient incentive to cooperate with a proposal. The next major consideration often becomes cash flow. The creditors want to see that you are making a substantial effort to pay what you can, so if you have an extra $1500.00 left at the end of a month that is not accounted for and only propose to give the creditors $400.00 out of this, the creditors are not going to see this as a realistic effort. Finally, when dealing with certain creditors they may have very specific interests that must be satisfied (for instance, Canada Revenue Agency, often they are concerned with future compliance, so it is necessary to include a compliance term within the proposal).

As you can see, there are a number of interests that must be balanced / considered when preparing the proposal and it is essential that you consult with a licensed trustee who is experienced at preparing and supporting the proposal process. When dealing with such an office you will find that a well crafted proposal rarely goes sideways, but it is essential that all avenues are considered and contained within the proposal itself.

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