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What We Do

Stuck Paying Forever
on a Line of Credit?

Whether it's a personal LOC, a student line of credit, or a HELOC against your home, interest-only minimum payments at a variable rate can keep you in debt for decades. A Licensed Insolvency Trustee can stop the interest, reduce the balance, and combine it with everything else you owe — into one affordable monthly payment.

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Personal LOC
Balance$28,400
HELOC
Limit used$74,200
Student LOC
Balance$22,600
DISCHARGED
Revolving Balances
Wiped or Restructured
Stop interest from growing
Reduce what you owe up to 80%
No more minimum payments
One low monthly payment
The Basics

Why Lines of Credit Become a Permanent Debt

A line of credit is revolving credit — you draw on the limit, pay it down, draw again. Unlike a car or mortgage loan, there's no fixed amortization. The bank only requires interest-only minimum payments, which means the principal can sit untouched for years.

Most LOCs carry a variable rate tied to prime. When prime moves, your payment moves with it. Over the last few years, payments on a $50,000 line of credit have nearly doubled — without anyone borrowing another dollar.

Many people use the line of credit to pay off credit cards, intending to clear the balance. The cards get paid off, but rarely cut up — and within a year the cards are maxed again. Now the debt sits on both the cards and the LOC.

Personal LOCHELOCOverdraft Protection
A $50,000 LOC at Prime + 3%
Sample illustration
Balance owed$50,000.00
Current rate (prime 7.20% + 3%)10.20%
Interest-only minimum payment$425 / mo
Interest paid this year+$5,100.00
Balance one year later$50,000.00
In a Consumer Proposal~$15,000
Interest-only payments leave the balance untouched. A Consumer Proposal stops interest on day one and replaces the LOC payment with one fixed monthly payment for all unsecured debts.
Two Very Different Products

Unsecured LOC vs. HELOC

They share a name, but legally they're nothing alike. Which one you have determines whether the balance can be wiped out - or whether your home is on the line.

Unsecured line of credit
A personal LOC is a revolving credit product issued by a bank or credit union with no collateral pledged. Your lender sets a credit limit and charges interest on whatever balance you carry — typically at prime plus a margin that floats with the Bank of Canada rate. Unlike a mortgage or car loan, there is no fixed repayment schedule: lenders only require a minimum payment, usually equal to the interest accrued that month, so the principal can sit untouched for years.
  • Variable rate: your payment rises every time the Bank of Canada raises its overnight rate.
  • No payoff date: minimum payments cover interest only - the balance never shrinks on its own.
  • Revolving access: any amount repaid becomes available again, making it easy to re-borrow and stay stuck.
  • Right of offset: if the LOC is at the same bank as your chequing account, the bank can sweep funds to cover arrears without notice.
  • Demand feature: most personal LOCs are repayable on demand, meaning the bank can call the full balance at any time.
HELOC (Home Equity LOC)
A HELOC is a revolving credit product secured by a registered charge against your home — typically in second position behind your mortgage. Because it is secured, the lender holds a legal interest in your property and can enforce that security if you fall behind. Credit limits are set as a percentage of your home's appraised value, and like a personal LOC, repayment is interest-only unless you choose to pay more.
  • Secured debt: the lender holds a charge on title — they can trigger power of sale if payments are missed.
  • Variable rate: HELOC rates move with prime, so your payment increases whenever the Bank of Canada raises rates.
  • No amortization: there is no required payoff date - minimum payments cover interest only, leaving the principal untouched indefinitely.
  • Limit tied to home value: if your home value drops, the bank can reduce or freeze the available credit without notice.
  • Cross-collateralization: if both your mortgage and HELOC are with the same lender, they are often cross-collateralized - default on one can trigger the other.
A Licensed Insolvency Trustee reviews each credit line — secured or unsecured — and builds a plan around what you want to keep and what makes the budget work.
If You Fall Behind

What the Bank Can Do

A line of credit is technically a demand loan. The bank has more power than on a credit card or installment loan — and they don't have to wait for a missed payment to use it.

Demand for repayment in full
Most LOCs are demand loans. The bank can require the entire balance back in a single payment — at any time, for any reason — not just for missed payments, but for credit-score changes or shifts in their lending policy.
Right of offset
If the LOC, your chequing account, and a savings account are all at the same bank, the bank can legally pull money straight out of your deposit accounts to pay down the line of credit — without notice or your permission.
Limit cut or frozen
The bank can freeze or reduce your limit at any time — often the moment another debt goes into collections or your score drops. The available cushion disappears without warning, even if you've never missed a payment.
Lawsuit & garnishment
An unsecured LOC in default is sent to legal collections, then to court. A judgment lets them apply for a wage garnishment of up to 20% of your gross pay or freeze any bank account you hold.
Power of sale (HELOC)
If you fall behind on a HELOC, the lender can begin power-of-sale proceedings — the Ontario equivalent of foreclosure. The home is sold, the HELOC and first mortgage paid, and any shortfall becomes unsecured debt.
Co-signer pursued
On a joint LOC or one with a co-signer, the bank can pursue either party for the full balance. A filing only protects the person who files — the spouse, parent or family member who co-signed is still on the hook.
How You Got Here

A Line of Credit Is the Easiest Debt to Grow

The line of credit is the most useful financial tool a bank offers — right up until it isn't. A large limit, a low minimum, and a tap you can open at any time are great in an emergency. They're terrible when emergencies happen month after month.

Most of our clients didn't max out the LOC on one big purchase. The balance climbs in small bites: a new roof, a transmission, a stretch of slow self-employment, a kitchen renovation, helping a child through school. Each draw felt manageable. The interest-only minimum kept up just fine.

Then prime moved. Or a job changed. Or a credit card had to be paid off with the LOC. By the time most clients reach us, the limit is fully drawn, the minimum has gone from $200 to over $700, and there's no path to ever paying it back — only paying interest forever.

$480payment this month
$465 interest
Goes to interest$465
Comes off what you owe$15
You pay every month,
but the balance barely moves
Every prime-rate hike since 2022 added to your minimum payment — but none of it touched the principal. The bank has no incentive to ever stop charging interest.
Your Options

How to Resolve Line of Credit Debt

Four real paths. Choose based on whether your LOC is unsecured or backed by your home, your income, and the other debt is on the file.

Four real paths. Choose based on whether your LOC is unsecured or backed by your home, your income, and the other debt is on the file.

1
Convert to an Installment Loan
Ask the bank to convert the LOC into a fixed-rate, fixed-term loan. Forces the balance down on a schedule and locks the rate, but the monthly payment usually goes up significantly — and approval depends on income and credit you may no longer have.
2
Refinance the Mortgage
If there's equity in the home, refinance the first mortgage and use the proceeds to pay off the LOC and other debts. Lowers the rate, but rolls unsecured debt onto your house, restarts the amortization, and almost always costs more in total interest over time.
3
Credit Counselling / Debt Management Plan
A non-profit credit counsellor consolidates payments and tries to negotiate reduced interest with the bank. The principal is still owed and creditor participation is voluntary — large LOCs are often declined for this kind of program.
4
Consumer Proposal or BankruptcyMost Effective
An unsecured LOC is included with your other unsecured debts and reduced — often by up to 80% — then rolled into one affordable monthly payment. The moment you file, the bank's right of offset is blocked, interest stops, and any demand for repayment is frozen. A HELOC can be kept (if affordable) or surrendered, with the shortfall included.

Stop Paying Interest Into a Black Hole

Book a free, confidential consultation today. In 30 minutes, we'll look at your debt and show you what one affordable monthly payment would look like.

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Common Questions

Lines of Credit Frequently Asked Questions

Quick answers to what we hear most from Ontarians paying interest forever on a maxed-out line of credit.

Q
Can a line of credit be included in a Consumer Proposal or Bankruptcy?
Yes — if it's unsecured. A personal LOC, or overdraft protection, is treated the same as a credit card. It can be combined with all your other unsecured debts into a single Consumer Proposal or Bankruptcy, with interest stopped the day you file.
Q
What happens to my HELOC if I file?
A HELOC is secured against your home. As long as you keep the payments current, you can keep the house through a proposal — only your unsecured debts are reduced. If the HELOC payment itself is unaffordable, surrendering the property converts any shortfall into unsecured debt that can be included in the filing.
Q
Can my bank take money from chequing to pay the line of credit?
Yes — it's called the right of offset. If your LOC, chequing account and credit card are all at the same bank, they can move money out of chequing to cover the LOC without notice. Filing a Consumer Proposal or Bankruptcy stops this immediately, and we help you move payroll to a fresh account before filing.
Q
What about a joint line of credit or co-signer?
A Consumer Proposal or Bankruptcy only protects the person who files. If a spouse or family member is a co-signer or joint borrower on the LOC, the bank can pursue them for the full balance. We discuss this with you up front and look at whether both parties should file together.
Q
My LOC is a demand loan — can the bank call it any time?
Yes. Most personal and HELOC lines of credit are technically demand loans, meaning the bank can require repayment in full at any time, for any reason — missed payments, a deterioration in your credit score, or a change in their lending policy.
Q
Will rising interest rates keep making things worse?
Yes — until you act. Variable-rate LOCs reprice every time prime moves. Every quarter-point hike on a $50,000 balance is roughly $125 a year straight off your budget, and none of it pays down the principal. A proposal converts that variable cost into a fixed, predictable monthly payment.