Debt Management Plans

• Debt management agencies, governed under federal laws, can potentially advocate on your behalf to reduce and restructure your unsecured debts such as credit card and medical bills. You pay an accredited agency one monthly lump sum for your restructured debts; the agency then distributes the funds to your creditors as agreed, according to the FTC.
  
  

The Bankruptcy Option

• Some people might have no choice but to file for Chapter 7 debt elimination bankruptcy or court-supervised debt management and reduction under Chapter 13, according to the book "How to File for Chapter 7 Bankruptcy."
  
  

Credit Counseling Requirement

• Whether you plan to file bankruptcy or pursue a debt management plan with a non-governmental agency, under federal laws you must first complete a credit counseling session, according to both the FTC and the book "How to File for Chapter 7 Bankruptcy." A counselor reviews your finances during these sessions and can help determine which debt management option is best for your situation.