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There are several strategies you can consider when dealing with problem debt. Two of the most popular proposals are Consumer Proposals and division 1 proposals. Below is a comparison chart between the two to breakdown how they could work for you.

Consumer Proposal

Division 1 Proposal

Debts must be less than $250,000Debts must be more than $250,000
Only individuals can file a Consumer ProposalIndividuals, a bankrupt, or a trustee of the estate of a deceased bankrupt can file a Division 1 proposal
Not ApplicableThe Trustee must include a projected cash flow statement of the insolvent with this Proposal
Creditors have 45 days to vote for or against the proposal.A mandatory Meeting of Creditors must be held within 21 days of filing the proposal. The creditors will then vote for or against at this meeting.
If the Proposal is rejected, the debtor may opt to file a Bankruptcy or attempt to settle with the creditors directly in an informal manner.If the Proposal is rejected at the Meeting of Creditors, the debtor is automatically bankrupt.
2 mandatory counselling sessions must be attended during the Consumer Proposal (the first within 60 days, the second within 210 days)counselling sessions not required in a Division 1 Proposal
Proposal can be 1-5 years. Paying down the proposal earlier is recommended and welcomed.A Division 1 Proposal is normally a five-year process but the length can differ. Paying down the proposal earlier is recommended and welcomed.
If three payments are missed then the Consumer Proposal is considered “annulled” , the protection is immediately lifted and the creditors have the legal right to pursue the amounts owing to them.In a Division 1 Proposal, if in default the protection is lifted and creditors have the legal right to pursue amounts owing to them.
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