You Owe Money —
Process for Division I Proposals

A Division I proposal is a formal procedure governed by the Bankruptcy and Insolvency Act and is available to businesses and individuals — there is no limit with respect to how much money is owed.


  1. Locate a trustee in bankruptcy and set up a meeting. The trustee is someone who will work with you to develop a Division I proposal that works for both you and your creditors.
  2. The trustee will file the proposal, or the notice of intention to file a proposal, with the Office of the Superintendent of Bankruptcy. Once you submit the notice of intention to file a proposal, or your proposal, you will stop making any payments directly to your unsecured creditors, any salary garnishments will stop and lawsuits against you by creditors will be stayed (stopped). Secured creditors have the option of being part of a Division I proposal.

    Responsibilities of the Debtor

    • disclose all of his or her assets (property) and liabilities (debts) to the trustee;
    • attend the first meeting of creditors;
    • attend two counselling sessions;
    • advise the trustee in writing of any address changes; and
    • generally assist the trustee in administering the proposal.

    Within five days of filing, a copy of the notice of intention is sent to all known creditors (including a report on the affairs of the debtor). The proposal itself must then be filed within 30 days after the notice of intention, unless the Court has granted an extension.

  3. The trustee will set up a meeting of creditors where creditors will vote to accept or reject the proposal. At the meeting of creditors, the trustee must also present the creditors with an estimate of what the creditors would realize under a bankruptcy compared with the amount they are being offered under the proposal.
    • If at least 66.6 percent (two thirds) in dollars and 50 percent plus one in number of eligible creditors who vote approve the proposal, the proposal is accepted by the creditors. The proposal must then be approved by the Court.
    • If the proposal is accepted by the creditors and approved by the Court, all unsecured creditors are bound by the proposal.
    • If the proposal does not receive the required votes, you are immediately declared bankrupt as of the date of the meeting of creditors.
  4. If your Division I proposal is accepted,
    • you will be responsible for paying either a lump sum or periodic payments to the trustee and adhering to any other conditions in the proposal; and
    • you retain your assets so long as you make your payments to your secured creditors.
  5. If you meet the conditions in the proposal in full, you will be legally released from the debts included in the proposal. If the terms of the proposal are not honoured, then the trustee or a creditor may apply to the Court for the proposal to be annulled and you'll be placed into bankruptcy.

Enquiries or complaints

If you have questions about the process for Division I proposals, contact us.

If you feel that the process was poorly managed or believe you have suffered a prejudice, please contact us. The OSB keeps records of all complaints and can investigate any complaint from a debtor or other person.

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