Skip to main content

Exit WCAG Theme

Switch to Non-ADA Website

Accessibility Options

Select Text Sizes

Select Text Color

Website Accessibility Information Close Options
Close Menu
Nowack & Olson, PLLC Florida Bankruptcy Lawyer
  • $0 down and low payment plans available. We can assist you without having to leave your home.

Debt management plans vs. Chapter 13 bankruptcy

Some Florida residents who are overwhelmed by their financial obligations choose to try debt management plans through local nonprofit credit counseling agencies. It is important for people considering these plans to understand how they work. This may help them to better understand what will be required of them as well as whether the plans are the best option for them.

In a debt management plan, a credit counselor negotiates lower interest rates with the various creditors. The debtor then makes a single monthly payment to the credit counseling agency, which then disburses the payments to the creditors. Through the plans, people pay off all of their debts in four or five years. Being able to stick with the plans is difficult for most people, as they must live on tight budgets and change their lifestyles.

The successful completion of a debt management plan often involves reducing all unnecessary expenses. People are also required to get approval from the credit counseling agency before they obtain or use any additional credit during the plan. This means that they will need to save up for large and unexpected expenses, such as car repairs.

Instead of a debt management plan, some people opt to file for Chapter 13 bankruptcy. In this type of bankruptcy, people repay a portion of their debts over a three- to five-year period. For non-priority unsecured debts, debtors repay in most cases only a portion of their balances. If they successfully complete their Chapter 13 repayment plans, most remaining unsecured debt balances are discharged. This chapter is meant for people who have a regular source of income, and a lawyer can outline the eligibility requirements.

Facebook Twitter LinkedIn

By submitting this form I acknowledge that form submissions via this website do not create an attorney-client relationship, and any information I send is not protected by attorney-client privilege.

Skip footer and go back to main navigation