Debt Management Plans and Bankruptcy

: Reese Baker & Associates

  Filed under: Debt

Before you can file for bankruptcy, you must attend a court-approved debt management course. You can attend these online, over the phone, or in person. You will need to file a certificate of completion with your bankruptcy petition.

Repayment Plan

Not all credit counseling agencies operate the same way. Some debt management programs will be biased and only suggest a repayment plan through their agency. Some will want you to sign up with a debt management plan (DMP) to repay your back debt. Some will not even discuss the option of bankruptcy with you. 


A debt management plan is usually for the benefit of the creditors and not necessarily for the consumer. Credit card companies fund part or in full these agencies, and it is in the counselor’s best interest to put you on a repayment plan. Often they get a monthly fee from the consumer for handling the payments and a commission from the credit card companies. 

Some questions to ask the counseling agency are:

  • What are your fees? Get a specific price for all services in writing. 
  • Will there be a formal agreement or contract? Be sure and read the fine print if so.
  • What if I can’t afford my payments? If an agency is unwilling to work with you because you can’t afford their fees, check out other agencies that will. 
  • Are you licensed with my state, and what are your qualifications?
  • Will you sell my contact information or keep it confidential. 

Credit counseling agencies may highlight the negative aspects of bankruptcy and may neglect to mention the negative issues with DMP’s. Filing bankruptcy can eliminate all of your qualifying unsecured debt such as credit cards and medical debt.

Contact a Houston bankruptcy attorney to find out how bankruptcy can help you achieve a fresh financial start.