While it's certainly true that you'll want to avoid bankruptcy if you possibly can these debt management outfits have their drawbacks.

First, some of these firms are funded by major retailers. The stores don't want you to file for bankruptcy protection because in the end all they get is a court order to cancel the debt with no funds received.

So to avoid that they launch these companies that "help" debtors to pay off all their bills without any need for bankruptcy relief. If you fall into the clutches of these people you can expect to be given a hard sell that includes dark tales of the personal hell that awaits anyone who even considers bankruptcy. Of course they're exaggerating because for some bankruptcy is the best solution.

Under the chapter 13 law, if you miss a payment the court will give you an opportunity to make up for it and get back in line with your payment plan without any need for a collection agent getting involved. When you're dealing with a debt management outfit you get no such protection. Any one creditor can destroy your entire program if you slip up even once.

Most debt management plans require you to pay all your debts in full while under chapter 13 some of your debts can be cancelled (if the creditor doesn't show up at the creditor's meeting the debt can be cancelled by the court) and the actual payment amounts are often reduced for a chapter 13 plan. Now perhaps you can see why retailers support debt management plans so passionately.

Many of these debt management agencies pay their sales staff large commissions for signing people up which means their advice is anything but fair and balanced. They also get commission fees from the creditors themselves which is even more reason to distrust them. Under chapter 13 the creditors get no fees of any kind.