If you have several debts that you’re finding difficult to pay off, you might be thinking of enrolling in a debt management plan. This kind of plan can be very helpful to consumers because the credit counseling organization that administers it negotiates better terms, like lower interest rates or reduced/waived creditor fees. However, only certain kinds of debt qualify for inclusion in a debt management program. Before you decide to enroll, you should understand which of your debts are eligible for the plan’s benefits and which will not be covered.

Unsecured Debts

You can put unsecured debts in a debt management plan. Unsecured debts are debts for which you haven’t given your creditor any collateral, or objects the creditor can take possession of if you fail to pay. Some examples of unsecured debts are personal loans from a bank and personal credit card accounts. Cards from a credit card company or bank are eligible, as are store cards. Gas cards also qualify.

Outstanding medical bills are unsecured debts, and you may put them in a debt management plan. Open utility accounts don’t qualify, but outstanding balances on closed utility accounts do. That means you can’t put the electricity bill for your current residence in the plan, but if you still owe money on the electricity account for a previous apartment, that old account can go in the plan.

Repossessions can be included in a debt management program. That’s because although these debts were once secured, the creditor has since taken the collateral and sold it to cover part of the debt. Now you owe the creditor the remaining balance, but you no longer have any collateral to give up. What you still owe is thus categorized as an unsecured debt.

Secured Debts

Secured debts like home mortgages and auto loans can’t go in a debt management program. Some other examples of secured debts are loans for boats, motorcycles, or other vehicles that take those items as collateral. Finally, business credit cards also count as secured because their terms depend on the assets of the business. So personal credit cards are eligible for debt management plans, but business credit cards are not unless they are under the name and social security number of the business owner.

A debt management program can get you better payment terms only for your unsecured debts. However, the credit counselor who helps you enroll in the plan will show you how to budget for payments on debts that aren’t eligible for inclusion in the plan.