Biodegradable plastics have certain challenges in a waste management perspective. The existing literature reviews fail to provide a consolidated overview of different process steps of biodegradable plastic waste management and to discuss the support provided by the existing legislation for the same. The present review provides a holistic overview of these process steps and a comprehensive relative summary of 13 existing European Union (EU) laws related to waste management and circular economy, and national legislations plus source separation guidelines of 13 countries, to ensure the optimal use of resources in the future. Following were the major findings: (i) numerous types and low volumes of biodegradable plastics pose a challenge to developing cost-effective waste management infrastructure; (ii) biodegradable plastics are promoted as food-waste collection aids, but consumers are often confused about their proper disposal and are prone to greenwashing from manufacturers; (iii) industry-level studies demonstrating mechanical recycling on a full scale are unavailable; (iv) the existing EU legislation dealt with general topics related to biodegradable plastics; however, only the new proposal on plastic packaging waste and the EU policy framework for bioplastics clearly mentioned their disposal and (v) clear disparities were observed between disposal methods suggested by national legislation and available source separation guidelines. Thus, to appropriately manage biodegradable plastic waste, it is necessary to develop waste processing and material utilization infrastructure as well as create consumer awareness. In the end, recommendations were provided for improved biodegradable plastic waste management from the perspective of systemic challenges identified from the literature review.