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What are the disadvantages of a Division 1 Proposal?

The main disadvantage of a Division I Proposal is that you are deemed bankrupt if creditors reject the proposal or if you fail to comply with the proposed terms.

The other disadvantages of a Division 1 Proposal include:

  1. It's more expensive than bankruptcy. 
  2. It's often a longer process as compared to bankruptcy.
  3. Creditors will drive the proposal terms (Creditors can vote against and request more money to be paid as a condition of their acceptance of the proposal)
  4. There is no guarantee creditors will accept your initial proposal offer.