If you really have to go through a debt consolidation company, here are some good tips.

We hope you can avoid going this route, as you it may well ruin your credit. However, I get so many letters asking for good agencies that I decided to put together this tip sheet.

• One last try to dissuade you from going through a debt consolidation company....the Debt Zapper program from the Bank Card Holders of America, 524 Branch Drive, Salem, VA, 24153, prepares a personalized pay-off schedule to help pay off credit cards in the fastest, least expensive way possible. Cost is $15.

• Locate your local CCCS Office. Of all the debt consolidation companies, in my opinion, they are the least harmful to you and your credit. Here is a good link to search for the one nearest you, by zip code. Local companies are also a good idea because the local authorities have jurisdiction over them. They can do little if the company is out of state.

• Is the agency in good standing with the Better Business Bureau? You can check out any company you are thinking of signing up with immediately online. In addition, you should also call your state's consumer protection agency/state attorney general's office to see if there have been complaints.

• Not all states require licensing for debt consolidation agencies. The most notable examples are the states of Maryland and Florida. If the proposed company is based there, I would exercise extra caution (in other words, run!). In addition, some states have started licensing credit counselors. If you know your proposed counselor's name, another question to ask your state attorney general is whether or not he or she is licensed.

• Look before you leap. It is crucial to think things out carefully and do your homework before signing on the dotted line. This contract will affect you, your credit and therefore your lifestyle for years to come. A few days will not make any difference in the overall scheme of things if you are really behind in your bills or if creditors are hounding you. You can tell any callers that you are going to join a consumer credit counseling service and this should quiet them.

• Most CCCS companies are funded by the credit card companies and get most of their operating costs from them. However, they are still going to ask you for a donation. Nonprofit debt consolidation companies are 100% funded by their members "voluntary" donations, so you will be paying more in servicing fees with these organizations. And in the case of for-profit companies (debt negotiation, debt reduction companies are other names) companies, you will be charged up front servicing fees. In any case, spend some time questioning your counselor about all fees and donations you will be making. Be sure you know where these fees and donations are spelled out on your contract and take care to read this section.

• You need to consider how you got into this mess in the first place: by not being able to exercise control over your finances, right? If you only come out of these programs with your debt gone, you are only treating the symptom without addressing the root problem. You should look for programs which include "financial fitness" programs and budgeting plans as one of the primary focuses.

Do you have a question you feel we haven't answered?
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