According to court documents, the 25-year-old "I Want Candy" singer has $8,232.16 to his name, but he owes $1,368,140 to the IRS and $31,166 to American Express.
Carter's rep made the media rounds Thursday calling his client's decision "very positive."
"It's him doing what he needs to do to move forward," Steve Honig told CNN.
Honig said that Carter incurred most of his debt during his early pop star days.
"The bulk of the debt is from over 10 years ago when he was a minor and not in control of his finances," Honig added. "This has happened to a lot of people who had fame at such at a very early age."
"Aaron is really making smart decisions and taking control of his life," Honig also told Us Weekly.
"He's clean and sober, finishing his 75-city sold-out tour. And even though this is a negative story, this really is a positive step for him because it's him being able to put his past problems behind him and move forward," Honig said.
Carter is currently on the road for his first tour in eight years, after a 2011 stint in rehab and an off-Broadway production of The Fantasticks.