What is a Division 1 Proposal?

In most cases, if you are a person who owes more than $250,000 (not including your mortgage) you cannot file for a consumer proposal.

However, you may qualify for a different type of proposal – a division I proposal.

In this video, you'll learn what a Division 1 Proposal is and what to expect when filing for a Division 1 Proposal in Toronto.
*********
David Sklar & Associates Inc. - Erasing Debt and Rebuilding Lives® in the Greater Toronto Area with six convenient locations.

Regain control of your finances - call the Licensed Debt Professionals™ at 416-498-9200 for your FREE consultation.

Subscribe to our channel:

Follow us on social media:
- Facebook:
- Instagram:
- Twitter:
- LinkedIn:

*********

TRANSCRIPT

RICHARD - Hi, I’m Richard Sklar

JASON - And I’m Jason Sklar - from David Sklar and Associates

RICHARD - In this video we’ll answer a question that our clients often ask us: What is a Division 1 Proposal?

JASON - A Division 1 Proposal is Debt Relief for higher-debt individuals and businesses. It enables a debtor to avoid bankruptcy and be released from their unsecured debts after they’ve repaid a portion and honoured all the terms of their proposal.

RICHARD - The next question is: who can file a Division 1 Proposal? This debt relief option’s open to those who meet one of the two following conditions:

an individual who owes more than $250,000 in debt - excluding the mortgage on their primary residence,
a business (partnership or corporation) that owes any amount of unsecured debt.

In Ontario, only Licensed Insolvency Trustees like David Sklar and Associates can file and administer Division I Proposals.

JASON - The Division I Proposal process is complex and varies from case to case. For most businesses and some individuals, it can include:
Extensive audits and cash flow analysis
Tax liability assessment
And, business operation assessments

RICHARD - After a debtor has met with their trustee and reviewed their financial information – the trustee will go over all the options. If both agree that a Division I Proposal is the best choice, they’ll prepare a proposal together.

JASON - The proposal will set out the portion of debt that will be repaid and other terms that will be followed – in exchange for being released from the debts included in the proposal.

RICHARD - The Licensed Insolvency Trustee files and submits the proposal to the unsecured creditors.

Once the proposal is filed the unsecured creditors must:
Stop all collection efforts
Stop all legal actions
Stop charging interest
If the proposal is accepted, then the unsecured creditors must not restart these actions.

JASON - The creditors vote whether to accept or reject the proposal. For a Division I Proposal to be accepted more than 50% of the creditors in number and who hold more than 66.6% of the unsecured debt must accept the proposal. The Court must also approve the proposal.

RICHARD - If the creditors don’t accept a Division I Proposal – then the person or business filing the proposal is automatically put into bankruptcy. As well, if the debtor fails to honour all the terms of the agreement, they can be put into bankruptcy.

JASON - If you’re dealing with overwhelming debt and are in the Toronto area, call us at David Sklar & Associates to book a free consultation.

RICHARD - And if you want more information about Bankruptcy and Consumer Proposals in Toronto, check out the other videos on our channel, and click ‘subscribe’ to get notified when we post new videos about Bankruptcy and Consumer Proposals.

Proposal?