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An accountant can’t make debt disappear. But good debt management starts with one, because in an afternoon they can show you which debts cost the most, what your cash flow can carry, and what to pay first. On a $20,000 balance at 19.99%, paying $500 a month costs $13,219.52 in interest. That’s the sort of number that changes a decision.
What does an accountant actually do about debt?
Three things, mostly. They read your books and list every amount you owe with its rate and due date. They work out what your cash flow can carry each month. And they tell you what to pay off first.
They also spot the debts nobody put on the list. Unremitted GST/HST, payroll deductions you owe the CRA, and tax instalments you skipped all belong there. Those often carry penalties on top of interest, so they can cost more than a bank loan, and they tend to surface only when someone finally reconciles the accounts.
Bring them all.
What an accountant doesn’t do is negotiate with lenders by default or give legal advice on insolvency. If you’re already missing payments to suppliers, ask the accountant plainly whether the next call should go to a licensed insolvency trustee. It’s a fair question and a good one will answer it straight.
What should you bring to the first meeting?
Every statement you’ve got, even the ugly ones. Loan agreements, card statements, supplier invoices that are overdue, and any letters from the CRA. Add last year’s bank statements and a list of your fixed monthly bills, from rent to the phone plan.
Say what you’re afraid of, too. If one creditor has already threatened to send the account to collections, that changes the order of the plan, and the accountant can only account for it if they know.
How do you decide which debt to pay first?
Highest rate first, unless a smaller balance is about to go to a collector. The table shows what that means on the same $20,000 with different payments and rates. All figures come from the credit card payoff calculator maths.
| Rate | Monthly payment | Time to clear | Total interest |
|---|---|---|---|
| 19.99% | $400 | 109 months | $23,321.35 |
| 19.99% | $500 | 67 months | $13,219.52 |
| 19.99% | $700 | 40 months | $7,378.94 |
| 9% | $500 | 48 months | $3,867.75 |
| 9% | $700 | 33 months | $2,593.28 |
Look at the first row. Interest alone is $333.17 in month one, so a $333 payment never touches the balance at all. Below that line you aren’t paying down a debt. You’re renting it.
What does a worked debt plan look like?
Say your business owes $20,000 on a card at 19.99% and you can spare $500 a month. Left alone, that’s 67 months and $13,219.52 of interest. Find $200 more and it drops to 40 months, saving $5,840.58 in interest. Move the balance to a $20,000 business loan at 9% and the same $500 clears it in 48 months for $3,867.75.
That last move is worth $9,351.77 compared with staying on the card at the same payment. And once you’re at 9%, bumping the payment from $500 to $700 saves another $1,274.47 and gets you out about 15 months sooner. Small changes, big gaps.
Now the accountant’s job gets real. Can the business carry a fixed payment through a slow quarter? The line of credit calculator shows the cost of interest-only borrowing, and the personal loan calculator shows the payment on a term loan. Your accountant can then tell you whether the loan interest is deductible in your case. That depends on what the money was used for, so ask them, don’t assume.
Which debts to the CRA can’t wait?
Tax debts grow in their own way. The CRA’s late-filing penalty on a GST/HST return is 1% of the amount owing, plus 25% of that 1% for each full month it’s late, up to 12 months. Nothing is charged if you owe $0 or you’re due a refund. Interest runs on top of the penalty. The formula is laid out on the CRA’s GST/HST filing penalties page.
Here’s what it looks like. Owe $10,000 and file four full months late: 1% is $100, and 25% of that is $25 for each of the four months, another $100. The penalty is $200, before any interest.
The CRA can cancel or waive some penalties and interest in extraordinary circumstances, so a late filing isn’t always final. The terms of the CRA’s payment arrangements aren’t covered here, so check the current rules on canada.ca before you count on one. An accountant will usually know what the CRA has agreed to in similar cases. Use the payroll remittance calculator to see what you should be sending each period.
When is it time to see an insolvency trustee?
When the debts are bigger than your cash flow will ever clear, or creditors have started legal action. Your accountant can tell you the numbers don’t work. Only a trustee can act on that.
LITs are the only professionals authorized to administer government-regulated insolvency proceedings that allow you to be discharged from your debt, such as consumer proposals and bankruptcies.
What is a Licensed Insolvency Trustee? Office of the Superintendent of Bankruptcy, ised-isde.canada.ca
The government’s page also says trustees give independent advice on all your options, not only bankruptcy.
Mistakes that make debt worse
Most of them feel sensible at the time.
Paying the smallest bill because it feels good is the most common one. Mixing personal and business borrowing is next, since it hides your real cost of running the business. Then there’s the idea that a lower monthly payment is a better deal. It stretches the loan, and the table above shows what that does.
Also watch for a new loan used to pay an old one when spending hasn’t changed, since that only moves the problem to a new lender with a new fee schedule. And don’t hand over books that are six months behind and expect advice by Friday. Bad numbers give bad advice.
Limits of our examples: they assume a fixed rate and a payment made on time each month. Cards charge interest daily, so real costs run slightly higher, and a variable rate changes the picture every time it moves.
Where this information comes from
The payoff figures come from our loan calculator maths, checked on 30 September 2026. The GST/HST late-filing penalty formula comes from the Canada Revenue Agency‘s page on GST/HST filing penalties. The rates in the examples are made up for illustration and aren’t offers from any lender. This is an independent site, and no government body is behind it.
Frequently asked questions
Do accountants negotiate with lenders?
Not by default. They can prepare the numbers and a cash flow forecast, but talking to a lender or a creditor is usually your job or a trustee's.
Should I pay the highest rate or the smallest balance first?
Highest rate first saves the most interest. Clear a small balance first only if it is about to go to a collector.
Is a penalty from the CRA worse than bank interest?
It can be, because penalties are charged on top of interest. The GST/HST late-filing penalty is 1% of the amount owing plus 0.25% for each full month, up to 12 months.
Can late penalties be cancelled?
In some extraordinary circumstances the CRA may cancel or waive penalties and interest. You have to ask through its formal process.
When is it time to see an insolvency trustee?
When you are missing payments you can't catch up on. Ask your accountant plainly, and get the trustee's advice before you sign anything.
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