Debts greater than $75,000
As a Windsor trustee, I am occasionally asked what a debtor can do if his debts are over $75,000. He doesn’t want to file bankruptcy, and as noted on our website a consumer proposal can only be filed if the debts are less than $75,000 (not including the mortgage on the principal residence). What can he do?He can offer what is called a division 1 proposal. The legislation was originally intended to be used for companies, and was written when the average debt level was less a lot lower than it is today. A division 1 proposal is similar to a consumer proposal however there are some key differences:
- a meeting of creditors to vote on the proposal is required within 21 days of filing the proposal;
- the proposal is accepted only if the unsecured creditors accept the proposal by a majority in number and 2/3 in dollar value voting on the proposal;
- if the proposal is rejected, the debtor is automatically bankrupt; and
- if the proposal is accepted, the trustee then goes to court to receive court approval of the proposal.
There are other differences which are beyond the scope of this blog.
If your debts are debts are greater than $75,000, not including the mortgage on your principal residence, call or email me to discuss if a division 1 proposal can help you.
posted by Rebecca Martyn @ 2:33 PM
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