How long your debt takes to clear on minimum payments, and what a consumer proposal would change

Last updated July 2026.

Many years ago, in my first year of university, I took a course called Mathematics for Finance. We learned how to calculate the time value of money from first principles, and how those calculations apply to almost every interest-bearing financial product. At the time it was simply another university course. Today it is both a blessing and a curse.

It is a blessing because it lets me look at almost any loan or financing agreement and understand immediately what it is really going to cost over time. It is a curse because, as a Licensed Insolvency Trustee, I now spend my days meeting people who were never shown that picture. Sometimes I look at the financing terms someone has signed and, knowing exactly how the mathematics will unfold over time, it genuinely hurts.

One case has stayed with me for years. A debtor financed a recreational trailer at a very high interest rate. When the monthly payment became difficult to afford, he was reassured that the lender could simply lower the payment and “add the difference to the balance owing at the end of the term.” It sounded like a reasonable solution. Five years later he still owed almost as much as he had borrowed, yet the trailer itself had lost roughly half its value. He had faithfully made every payment, but financially he had barely moved.

Before you laugh and think that could never happen to you, remember that many of us experience exactly the same mathematics every month with high-interest credit card debt. We simply do not see it, because the numbers unfold slowly over years instead of being laid out in front of us.

That is why I built the Consumer Proposal Calculator. It is not just one calculator; it is a two-level educational tool. Level 1, Years to Pay Off Debt, helps you see what high-interest debt is doing over time. Level 2, Monthly Payment Amount, helps you understand how a Licensed Insolvency Trustee estimates what a consumer proposal might look like in your own circumstances. Together they explain both the picture and the arithmetic.

Most people do not need to understand the formulas taught in a university finance course. They simply need to see what those formulas are doing. For most of us, a picture explains in seconds what pages of mathematics never could.

So here is the experience the picture explains. You make the payment every month. It clears. And the next statement arrives looking almost exactly like the last one.

That is not a failure of discipline, and it is not your arithmetic playing tricks on you. It is the design of high-interest debt working exactly as designed. When the interest charged for the month is nearly as large as the payment you make, almost the whole payment goes to interest, and the balance barely moves. You are paying, in full, on time, and standing still.

Here is the picture in numbers. Suppose you owe about $100,000 at an interest rate of 21 percent, and you pay about $1,682 a month. It feels like a serious payment, because it is one. But at that balance and that rate, the interest for the first month alone is roughly $1,678. So out of a $1,682 payment, only about $4 comes off what you actually owe. Four dollars. The rest is rent on the money.

Carried forward, that same steady payment takes just over three decades to clear the debt, and by the end you will have paid more than six hundred thousand dollars, most of it interest. The debt was $100,000. The interest alone runs past $500,000. That is not a warning and it is not a scare figure. It is just what the multiplication does when the payment sits a hair above the interest line.

Try the picture with your own numbers

None of these numbers are ours to keep fixed. They are a starting illustration. The visual on this page arrives already working, loaded with those figures, and your only job is to play with it. You can work it two ways: drag the sliders or type your numbers straight in, or answer a short set of guided questions that settle the figures to the nearest band for you. Change the debt to your debt. Change the rate to your rate. Change the payment to the amount you actually send each month. If you arrived here looking for a credit card minimum payment calculator, use the visual exactly that way: set the payment to the minimum your card asks of you, and the graphs show what that choice costs in years and in interest. It models a fixed payment you choose; a real card’s shrinking minimum is slower still, and the minimum-payment section below explains that difference. If you lower the payment to at or below the first month’s interest, the picture does not break: it shows the debt never reducing, ten level bars with the trap marked, because that is the honest result. The graphs redraw instantly as you change the numbers. Nothing is saved and nothing is sent.

Back to the Consumer Proposal Calculator

Understanding the two graphs

The first graph shows the traditional path. One bar per year, the balance stepping down slowly toward zero, and beside it the running total of interest paid.

The second graph, drawn on the same scale so the comparison is honest, shows a different route out of the same debt: a consumer proposal, a formal legal route explained fully a little further down this page. On the same $100,000, a proposal might resolve for about $30,000, paid in equal instalments of about $500 a month over five years, with no interest added. Same debt, drawn on the same axis: a lower monthly payment, a fixed end date, and the interest meter switched off. Set beside a payment that takes decades, the difference is not an argument. It is a shape you can see.

One honest line belongs on that second graph, and it belongs here too. The 30 percent, the five years, the $500 a month are an illustration of how consumer proposals commonly resolve. They are not an offer, and they are not a prediction about your file. A proposal’s real terms depend on your circumstances, and they are negotiated with, and voted on by, your creditors. The only way to know your numbers is a full review with a Licensed Insolvency Trustee. So treat this page as a picture, not as advice about your situation. The picture shows the kind of outcome a proposal can produce. It does not promise you one.

How credit card minimum payments work

A credit card minimum payment is usually set in one of two ways: a flat dollar amount, usually about $10, plus any interest and fees; or the higher of a dollar amount, typically about $10, or a percentage of the current balance, typically about 3 percent. Your cardholder agreement states which method your card uses.

Two features of that design matter here. The first is that under the percentage method the minimum is calculated on the balance, so as the balance falls, the required minimum falls with it. A minimum payment is a moving target that shrinks as you make progress, which stretches the payoff even further than a fixed payment would. The calculator on this page deliberately models a fixed monthly payment, not a shrinking minimum, because a fixed payment is the honest best case. A real card’s shrinking minimum generally makes the trap deeper, not shallower.

The second feature is regional. Minimum-payment rules are not the same across Canada. In Quebec, consumer protection law sets a regulated floor: since August 1, 2025, the minimum payment on a credit card must be at least 5 percent of the balance. Wherever you live, the exact minimum your card sets is a matter of your cardholder agreement and your province, so treat the numbers here as an illustration of the mechanism, not as the terms of your specific card.

The mathematics, step by step

The illustration on this page assumes a rate of 21 percent, compounded twice a year. That is a stated modelling choice, named plainly so you can check it. Compounding twice a year is the convention Canadian mortgages use, and it is used here as a clean, conservative way to illustrate high-interest debt. It is not a claim about how any particular credit card charges interest; many cards calculate interest daily, which works out to more. This page illustrates the mechanism. Your card’s own disclosure states its actual terms.

With that said, here is the arithmetic, in plain steps:

– At 21 percent compounded twice a year, the true yearly cost works out to est. 22.1 percent. – Spread over twelve months, that is a monthly rate of est. 1.678 percent. – On a $100,000 balance, the first month’s interest is therefore est. $1,678.01.

Now put the payment beside that number. A payment of $1,682 covers the $1,678 of interest and leaves about $4 to reduce the debt itself. That single line is the whole trap in miniature: when the payment sits just above the interest charge, the debt shrinks at a crawl, and the crawl is what turns a $100,000 debt into a multi-decade, six-hundred-thousand-dollar repayment.

Carried to the end, at the launch default of $1,682, with the $1,685 case shown for comparison:

Look at those two rows for a moment. Three dollars a month of difference changes the payoff by almost three years and about $55,000. That is how sensitive the math is near the interest line. The calculator always computes from the numbers you enter, never from a stored result, so every figure you see on this page is demonstrably true from the inputs shown.

What a consumer proposal actually is

A consumer proposal is not a debt-settlement product and not a negotiation service. It is a formal legal proceeding under the Bankruptcy and Insolvency Act, Canada’s federal insolvency law, and in Canada it can be filed only through a Licensed Insolvency Trustee. When creditors accept a proposal, the amount you owe is fixed as of the day of filing, your payments retire that fixed amount, no new interest is added under the proposal, and completing the payments releases whatever they did not cover. That is the structural reason the second graph looks the way it does: the balance declines in equal, interest-free steps to a fixed end date, rather than fighting a compounding rate for decades.

The legal framework, and how creditors actually decide

What decides the number on that second graph? Two different things, and it helps to keep them separate. One is the law. The other is how creditors actually decide.

The legal test comes from the Bankruptcy and Insolvency Act itself. Under the Act, the Licensed Insolvency Trustee who files the proposal must be of the opinion that it is reasonable and fair to you and to your creditors (section 66.14(a)(ii)). That is the test. (Courts in Ontario have interpreted what reasonable and fair means in several cases, but the provision remains, at its base, exactly that.) The Act does not say a proposal must pay creditors more than a bankruptcy would.

How creditors decide is a matter of practice, not a rule in the statute. Creditors get to accept or refuse a proposal, and they want a reason, an incentive, to approve it rather than let the debtor go bankrupt. If a bankruptcy would clearly pay them meaningfully more than the proposal offers, logic dictates they will not take the proposal. So in practice, a proposal is generally built to offer creditors more than a bankruptcy likely would. There is no hard and fast rule; that is simply how the negotiation tends to work. And there are rare exceptions. Creditors do sometimes accept a proposal that offers less than a bankruptcy might have paid them. But the working logic is incentive, and it is worth understanding, because it is what actually shapes the size of a real proposal.

Making the picture yours

The two levels are built as one educational experience: this page teaches the picture, Level 2 teaches your number, and each is more useful because the other exists. They are joined by a loop that is deliberately worked by hand.

Here is how the loop works. Finish the walk on this page, then continue to Level 2 and run your own figures to get your estimate. Then come back here and turn the proposal dial until the monthly payment on the second graph matches the estimate Level 2 gave you. The generic 30 percent becomes your number, because you set it. As Level 2 asks at the end: is your payment above, at, or near this amount? You may need to go back and tinker with Level 1, the picture on this page, a little bit more. The dial stays manual on purpose. Nothing fills itself in, because turning the dial until the numbers meet is the part where the math becomes yours.

When a consumer proposal is not the answer

Many people come into my office convinced they need a consumer proposal. Some do. Others leave with a repayment plan, better budgeting, a tax solution, or simply the reassurance that no insolvency filing is necessary at all. A proposal is a powerful tool, but it is not automatically the right one, and I have spent years telling people not to file one when something else served their interests better. An honest page has to say the same thing.

Sometimes the better path is simply to pay the debt down, especially if the balance is modest, the rate is not punishing, and the income is there to do it in a reasonable time. Sometimes bankruptcy, not a proposal, is the more honest fit for the facts. Sometimes, where the debt is owed to the Canada Revenue Agency, the better first move is not an insolvency filing at all but a route inside the tax system, such as taxpayer relief or a notice of objection to dispute the amount assessed. And sometimes, for a period, doing nothing is a legitimate listed option while circumstances settle. Those tax-specific alternatives, and the details of how a proposal helps with tax debt, have their own home in our article on Canada Revenue Agency garnishment, and this page routes you there rather than repeating them.

Two facts hold across all of those paths. First, only a Licensed Insolvency Trustee can file a consumer proposal or a bankruptcy in Canada; our debt-consultant cornerstone paper sets out that licensing line in full. Second, in my practice the first meeting is free and carries no obligation. That is information, not a hook. If you want to talk any of this through, bring this page to a conversation with any Licensed Insolvency Trustee. There is nothing to buy here.

Frequently asked questions

Why does my balance barely move when I pay the minimum?

Because most of the payment is interest. When your payment is only a little larger than the interest charged for the month, the small remainder is all that reduces what you owe. On a $100,000 balance at 21 percent, the first month’s interest is est. $1,678, so a $1,682 payment reduces the debt by only about $4. Larger payments break the pattern; the closer the payment is to the interest line, the longer the debt lasts.

How long would $100,000 at 21 percent take to clear at about $1,682 a month?

At those figures, est. just over 30 years, with total repayment past six hundred thousand dollars and interest alone past $500,000. The calculator here computes the precise figures live from whatever inputs you enter; these are the illustration defaults, not a fixed result.

Is a consumer proposal always cheaper than paying the minimum?

No. It depends on the debt, the income, the assets, and the terms creditors accept. A proposal often produces a lower monthly payment and a fixed end date with no interest, which is why the second graph looks the way it does, but it is not automatically the cheapest or the right option, and for some people paying down, a bankruptcy, or a tax-specific route is better. The only way to know your answer is a full review with a Licensed Insolvency Trustee.

How is a credit card minimum payment calculated?

Usually in one of two ways: a flat dollar amount, usually about $10, plus any interest and fees; or the higher of a dollar amount, typically about $10, or a percentage of the current balance, typically about 3 percent. Under the percentage method the required payment shrinks as your balance falls. In Quebec, consumer protection law sets the minimum at no less than 5 percent of the balance, since August 1, 2025. Your cardholder agreement states the exact rule and figures for your card.

Does the calculator use my actual card’s minimum payment?

No. It models a fixed monthly payment that you set. A real credit card minimum is usually a percentage of the balance, so it shrinks as the balance falls, which generally makes the payoff even slower than a fixed payment. The calculator uses a fixed payment because it is the clearer and more conservative illustration of the mechanism.

Ready to find your own number?

This page is Level 1 of the Consumer Proposal Calculator. It explains why high-interest debt can remain stubbornly unchanged even when you make substantial monthly payments.

The next step is Level 2: Monthly Payment Amount. Using your own income, assets, debts and household information, Level 2 estimates how a Licensed Insolvency Trustee calculates a consumer proposal and lets you compare that estimate with what your creditors might receive in a bankruptcy.

When you have finished Level 2, come back to this page and adjust the proposal payment on the graph until both levels tell the same story.

You now know why the debt behaves the way it does. The next step is to find out what your own numbers say.

Continue to Level 2 → Monthly Payment Amount

A note on dated figures

Dollar amounts, rates, thresholds, and statistics on this page are stated as of the dates shown beside them, and as of mid-2026 where no date appears. Each is re-verified before this page publishes and re-checked when the page is updated. Where a figure moves with regulation or the market, a Licensed Insolvency Trustee confirms the current number for your situation.