Div 1 proposal

March 28th, 2007 by Questions

I am in trouble. I just lost a well paying job and am working at one which pays half the money. I have debts over 140K and I would like to make a Div 1 proposal to the creditors. But what scares me is that a refusal of the proposal means automatic bankruptcy. There is one creditor in the group (my former employer) to whom I owe 55K and I suspect that even if the majority of the other creditors accept the proposal this creditor may reject it. Is there any way to avoid automatic bankruptcy?


One Response to “Div 1 proposal”

, A licensed trustee said:

The reason that you end up automatically bankruptc if your Division I proposal is rejected (or if you default in the terms after it is accepted) is to force the resolution of your financial problems. Given the size of the debt, what toehr alternatives do you think a person might have, if they have offered to settle with their creditors and the creditors have said “no?”

The way you reduce the risk of the creditors rejecting your proposal is to make certain that your offer is more generous than the benefit your creditors will receive if you end up bankrupt. Our firm’s policy is that we will not allow a client to file a proposal unless they are offering their creditors more money than he creditors will recieve in a bankruptcy. If you’re not then it is obvioulsy in the creditors best interest to refuse your proposal.

Sorry, but if you are going to file a Division I proposal it can only end in one of two ways: you make a deal with your creditors to repay a portion of the debt; or, you are bankrupt and have to satsify all of the requirements of the Bankruptcy and Insolvency Act for bankrupt individuals.

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