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What’s the difference between a Division 1 proposal and a consumer proposal

Hi, I would like to file a consumer proposal, but my debts are higher than the limit. Could you explain what the main differences between a division 1 proposal and a consumer proposal?

One Response to “What’s the difference between a Division 1 proposal and a consumer proposal”

A licensed trustee said...

Under current rules (as of July 2006) you can only file a consumer proposal if your debts, excluding the mortgage on your principal residence, are less than $75,000 (or $150,000 for two people in a joint proposal). In a consumer proposal if 50% + 1 of the unsecured creditors accept the proposal, the proposal is accepted. The creditors have 45 days to vote on the proposal, and if they don’t accept it, you are not automatically bankrupt.

In a Division 1 proposal there is no limit on debts, but two thirds in dollar value and a majority in numbers of the creditors must accept the proposal. If the proposal is rejected, you are automatically bankrupt. A creditor’s meeting must be held within 21 days of the filing of the proposal, so it is a more onerous procedure.

This is a simplified answer, so I suggest you contact a licensed trustee for more information.