Ordinary Proposal (Division 1 Proposal)
Protect Your Business From Bankruptcy
Restructure Debt Over $250,000 Without Losing What Matters Most
If you’re facing overwhelming debt of more than $250,000 (excluding your mortgage on your principal residence), an Ordinary Proposal—also known as a Division 1 Proposal—may be the perfect solution.
Similar to a Consumer Proposal but designed for more complex financial situations, an Ordinary Proposal is a legally binding process under the Bankruptcy and Insolvency Act (BIA). It’s for individuals and businesses that want to restructure their debt into manageable payments while avoiding bankruptcy.
Because the process is regulated by law, it must be administered by a Licensed Insolvency Trustee (LIT), such as our experienced team at Crowe MacKay & Company. We will be with you every step of the way so you can protect your assets, reduce stress, and move toward a fresh financial start.
Who is an Ordinary Proposal for?
An Ordinary Proposal is for you if:
- You have unsecured debts over $250,000 (excluding a mortgage on your primary home).
- You’re an individual with a complex financial situation or a business facing significant debt.
It can be especially helpful if you are:
- Looking to avoid bankruptcy and its long-term impact
- Hoping to restructure debt into affordable payments
- Wanting to preserve your business operations or personal assets while you repay your creditors
How an Ordinary Proposal Works
Initial Consultation with a Licensed Insolvency Trustee
We start with a detailed review of your finances, considering all available debt relief options. If an Ordinary Proposal is best suited, we’ll work with you to develop a fair and realistic repayment plan.
Ordinary Proposal vs. Consumer Proposal
Ordinary Proposal
- For debts over $250,000 (excluding mortgage on a principal residence)
- Can be used by businesses or individuals
- Typically involves more complex negotiations
- Same voting and court approval process
Consumer Proposal
- For debts up to $250,000 (excluding mortgage on a principal residence)
- Intended for individuals only
- Usually simpler and faster
- Same voting and court approval process
Considerations Before Filing
- The Bankruptcy and Insolvency Act (BIA) includes specific rules that may affect the structure of your proposal.
- If creditors or the court don’t approve the proposal, you may need to file for personal or corporate bankruptcy.
- Your credit score will be impacted, but generally less so than with bankruptcy.
- Staying committed to your payment plan is essential.
FAQ's
What is the difference between an Ordinary Proposal and a Consumer Proposal?
The main difference is the debt threshold. Consumer Proposals are for debts up to $250,000 (excluding a mortgage on a principal residence), while Ordinary Proposals are for debts over that amount and can also be used by businesses.
How much debt do I need to qualify for an Ordinary Proposal?
You must have more than $250,000 in unsecured debt, not including your mortgage on your primary home.
Can a business file an Ordinary Proposal?
Yes. Businesses often use Ordinary Proposals to restructure debt while continuing operations.
Will I lose my house if I file?
Not necessarily. You can usually retain your home if you keep up with your mortgage and secured debt payments.
How long does the process take?
Timelines vary in each situation. Most proposals take several months to finalize and a few years to complete repayment.
How does it affect my credit score?
Your credit score will drop, but typically less than if you filed for bankruptcy. Once you complete the process, you can begin rebuilding your credit.
What happens if my proposal is rejected?
If creditors or the court reject your proposal, you may need to consider other options, including bankruptcy.
Let’s Build a Plan That Works for You
If you’d like to connect with one of our Licensed Insolvency Trustees in Vancouver or Surrey, call (604) 689 3928, email [email protected], or fill in the form below.
Book a Free Consultation
Our licensed experts are here to answer all your questions about bankruptcy and consumer proposals. Whether you're an individual or a business, we’ll help you understand your options and guide you through every step of the process with care and confidence.