A division 1 proposal is an official procedure governed by the Bankruptcy and Insolvency Act of Canada. Unlike a consumer proposal, a division 1 proposal can be filed by businesses and individuals alike.
There is also no limit on the level of debt.
If a division 1 proposal is established as the best course of action for a case, the trustee will help structure a proposal offering your ceditors to pay a portion of your debts, reschedule payments over a longer period or a combination of the two.
This proposal will be based on your financial situation.
The payments are distributed by the trustee in accordance with the terms of the proposal and as required by law. The benefits of a division 1 proposal are the retainment of your assets, the cesssation of proceedings initiated by unsecured creditors, such a wage garnishments, and the possbility to avoid declaring bankruptcy.