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Homeโ€บCanadaโ€บDebt Payoff Calculator

Debt Payoff Calculator Canada 2025

Compare snowball vs avalanche debt payoff strategies, explore consumer proposal options, and find your debt freedom date.

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Estimates assume fixed rates and consistent payments. Consumer proposal terms are negotiated individually. Not financial advice. Consult a Licensed Insolvency Trustee for professional guidance.

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How to Use This Calculator

Tab "Snowball vs Avalanche"

Add your debts (name, balance, interest rate, minimum payment) and extra monthly payment. Compare the snowball method (smallest balance first) vs avalanche (highest rate first) โ€” see total interest, months to debt-free, and payoff order.

Tab "Consumer Proposal"

Enter your total unsecured debt, monthly income, and monthly expenses. See an estimated consumer proposal payment (typically 20-50% of debt), monthly cost vs minimum payments, and total savings.

Tab "Debt Freedom Date"

Enter total debt, average interest rate, and monthly payment. See your payoff date and how increasing your payment by $100, $200, or $500 accelerates your debt freedom.

The Formulas

Months to payoff (single debt):
n = โˆ’log(1 โˆ’ rร—B/P) รท log(1 + r)
where B = balance, P = monthly payment, r = monthly rate

Total interest:
Total interest = (P ร— n) โˆ’ B

Snowball method:
Pay minimums on all, extra goes to smallest balance
When smallest paid off, roll payment to next smallest

Avalanche method:
Pay minimums on all, extra goes to highest rate
When highest rate paid off, roll payment to next highest

Consumer proposal:
Typically pay 20-50% of total debt over max 5 years
No interest accrues during the proposal

Criminal Code interest cap (Jan 2025):
Maximum legal rate: 35% APR (reduced from 60%)

Example

Lisa โ€” $42,000 in Debt, $800/month Extra to Pay Down

Credit card: $15,000 at 19.99%. Line of credit: $12,000 at 7.5%. Car loan: $15,000 at 5.5%.

Avalanche (CC first)31 months, $5,840 interest
Snowball (LOC first)31 months, $6,280 interest
Avalanche saves$440 vs snowball
Consumer proposal (40%)$16,800 over 3 years ($467/mo)
Proposal savings$25,200 vs full repayment

Frequently Asked Questions

A consumer proposal is a legally binding agreement with creditors to pay a portion of your debt (typically 20-50%) over up to 5 years, with no interest. Unlike bankruptcy, you keep your assets (home, car, RRSP). It stays on your credit report for 3 years after completion vs 6-7 years for bankruptcy. Only a Licensed Insolvency Trustee can file one. Available for debts under $250,000 (excluding mortgage).
The change, effective January 2025, reduced the criminal rate from 60% APR to 35% APR to protect consumers from predatory lending. This primarily affects payday lenders and other high-cost lenders. Traditional credit products (credit cards at 19.99-22.99%, lines of credit at prime+2-5%) are well below this cap. Payday lending is also regulated provincially.
Mathematically, avalanche always saves more money because it prioritizes higher interest rates. However, studies show that the snowball method's quick wins improve motivation and make people more likely to stick with their plan. The best method is the one you'll actually follow through on. If you're disciplined, use avalanche. If you need motivation boosts, use snowball.

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