One of the questions I get asked most often is whether or not I think, based on their level of debt, someone should file bankruptcy. This person may be struggling with the idea of filing bankruptcy and one of the arguments they use against filing is that they are currently able to make the minimum payments on their credit cards.
My response is usually that the decision to file bankruptcy is intensely personal one and should not be made by anyone other than the person considering filing. However, I do encourage them to consider their debt to income ratio and ask whether, based on those two numbers, they could ever get caught up, let alone ahead, of their debt load. Credit card debt can be the most burdensome, what with its typically high interest rates and revolving nature. As soon as you pay off some, you may find yourself using them again to make ends meet.
I also encourage them to check out a calculator like this one at bankrate.com. It’s a great tool for helping people understand better how long it will take them to pay off their credit cards by paying just the minimum amounts. It could take you more than 20 years to pay off $5,000 on a credit card that is charging you 18% interest! Sure, you could make the minimum payments, but will you ever get ahead doing so?