There are, however, credit-counseling agencies that are reputable and actually provide valuable services to financially overwhelmed consumers. Tips that can help consumers avoid the scams include:

• Beware of promises that sound too good to be true. Claims of helping you "get out of debt easily" are a red flag.

• Deal with a reputable agency. Check with state consumer agencies and the local Better Business Bureau to make sure there have been no or few complaints against the organization, and that the complaints that have been raised were favorably resolved.

• As a general rule, non-profit credit counseling organizations are the best choices. There are also reputable for-profit companies, but screening the good from the bad will require greater consumer diligence.
  • Verify that the organization provides counseling and education, as well as debt consolidation and payment services, to help consumers achieve financial stability and remain debt-free.

  • Carefully read through any written agreement that a credit counseling organization offers. It should describe in detail the services to be provided; the payment terms for these services, including their total cost; how long it will take to achieve the desired results; any guarantees offered; and the organization's business name and address.

• Avoid paying up-front fees. Reputable agencies do not charge big up-front fees, but may take a small monthly fee for a debt repayment service. The initial consultation, however, should always be free.

• Beware of any high fees or required contributions, like high monthly service charges, that may add to the overall debt load and defeat efforts to pay off bills.

• Confirm payments with creditors. Some debt repayment services require the consumer to periodically send it one lump-sum check that it divides up among the creditors. Debtors who enter into these types of arrangements should verify with their creditors that the payments are actually being made.