Many people are surprised to discover that Trustees are able to offer two different types of proposals through the Bankruptcy Insolvency Act. The first of these is the commonly-known Consumer Proposal and the second is called a Division 1 Proposal (you can read about the differences between the two proposals in a previous blog post).
If you have filed a Division 1 Proposal and you are struggling with your payments you should contact the trustee as soon as possible to discuss your options If you miss a Division 1 Proposal payment, you are required to catch-up the missed payment within 30 days. If you fail to catch-up your missed payment within the time available, your Division 1 Proposal is in jeopardy of being annulled.
Unlike a consumer proposal which can be automatically deemed annulled, a Division 1 Proposal can only be annulled by a court order.
This means that if you miss a payment and do not remedy the default within the 30 days it would be possible for your trustee or a creditor to apply to court to have your Division 1 Proposal annulled. If your Division 1 Proposal is annulled by a court order you are deemed to have made an assignment in bankruptcy.
