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Consumer Proposals vs Division 1 Proposals
Who can file this type?
Division 1 – Proposals
A proposal under Division 1 can be filed for an individual, a corporation, or partnership.
Division 2 – Consumer Proposals
A proposal under Division 2 can ONLY be filed by an individual with less than $250,000 of unsecured debt.
Deemed Bankruptcy Rules
Division 1 – Proposals
If a Division 1 proposal is rejected by creditors, not approved by the court, or defaulted on from non-payment), then the debtor is deemed to be bankrupt.
Division 2 – Consumer Proposals
There is NO deemed bankruptcy rules in a consumer proposal
Cost
Division 1 – Proposals
The cost to file a Division 1 proposal is significantly higher then a consumer proposal. In many cases, this cost must be paid the by the debtor.
Division 2 – Consumer Proposals
Lower cost option for individuals with less then $250k of debt.
Length
Division 1 – Proposals
No specific rules
Division 2 – Consumer Proposals
Length of the proposal must be completed within 5 years
Deemed acceptance rules
Division 1 – Proposals
No specific rules
Division 2 – Consumer Proposals
Deemed acceptance by creditors and court is available
Types of debt that can be included
The same debts are included in a consumer proposal and a bankruptcy. Common examples include:
- Credit Card
- CRA Income tax debt
- Student loans *
- Line of Credit
- Unsecured Loans
- Payday Loans
What happens to your assets?
Division 1 – Proposals
You get to keep your assets.
Division 2 – Consumer Proposals
You get to keep your assets.
* Student loans are only included if you have been out of school for 7 years on the date you filed a Division 1 proposal or consumer proposal.