So you are in debt over your head and you can not afford to make the minimum monthly payments towards your credit cards, vehicle payments, regular bills, etc. So, an option would be to get help from Credit Counselors that tell you they will be able to help you out by:

1. Giving you the money (loan) if you are approved to pay off your debt then you have to pay them back monthly.
2. You send them money (a fee for them helping you out) and a certain amount of money each month while they work with the companies you owe money to and try to get the interest/payments to go down.

Question is: are they worth it?
My opinion? No

I am sure that these companies can help out people, otherwise they would not be in business. Fact is, most of the time (from personal experience and being told by other people) that if you receive a loan from them you will not be saving that much a month if any. Plus now you just have one big loan that at times will also have interest on it from the people that are suppose to be helping you. The ones that "deal" with your creditors have no legal rights. The creditors can still take you to court regardless if this company is speaking on your behalf. Not to mention your credit score will go down the drain.

The Negative Side of Credit Counseling
Before signing up with a credit counseling service consider the following facts:

--About 60 percent of those who sign up for credit counseling drop out before completing the program and a significant number of drop-outs go on to file bankruptcy. Many debtors find the four year program to be too rigid and difficult to stick with, and those who stay with it and complete it find that they have no extra money each month. In other words, they're basically living paycheck to paycheck while most of there income is sent to pay creditors. It's not a fun way to live for four years, particularly, when one considers that most of the debt can be wiped out in a few months by filing Chapter 7 bankruptcy.

--Although the ads for credit counseling services promise that your monthly bills will be lower, this isn't always true. Some people find their bills actually increase each month or decrease by as little as $10.00! The ads also don't tell you that not all of your creditors are willing to participate. More and more creditors, particularly the big credit card companies, are raising their standards for acceptance while lowering the fees they pay to credit counseling services. In fact, one of the "Big 10" credit card companies now requires all debtors to prove that they are in financial difficulty before accepting them into a new payment program. Another of the Big 10 credit card companies will actually raise your interest rate when you sign up for a credit counseling program.

--There are too many dishonest credit counseling services in operation. Knowing that 60 percent of their clients will drop out of the program, they try to collect as much as they can upfront from debtors. Watch out for hidden fees written in the contract that allow the counseling service to keep all or most of the payments you make during the first few months as their fee. These agencies don't care about helping you get out of debt; they only want to collect $200 or $300 from you as quickly as possible knowing there is a good chance you will drop out soon.

In October, 2003, Ameridebt, one of the nation's leading credit counseling services layed off all of its workers and is no longer accepting new customers. Why? Because of complaints made by many customers and the fact that both the Illinois and Missouri Attorney Generals have filed suit against Ameridebt for fraudulent practices. In particular, Ameridebt was accused of defrauding its customers by charging millions in hidden fees and not forwarding payments on to creditors as agreed. In November, 2003, the Federal Trade Commission filed suit against Ameridebt and has launched an investigation to determine what regulations and laws are needed to better regulate credit counseling services so that companies like Ameridebt won't be able to cheat consumers in the future.

Cambridge Credit Counseling and about 50 other credit counseling services, are currently being investigated or have been sued by the Federal Trade Commission and several states for dishonest practices (March, 2004). The FTC and IRS are currently conducting a joint investigation of credit counseling services to determine if they are operating as non-profit consumer-friendly organizations or are just scam organizations out to rip off the public (March 2004).

The IRS is auditing all credit counseling agencies who claim non-profit status. As of May 2005, they had revoked the non-profit status of 30 percent of all credit counseling agencies they audited because they discovered that these companies were not the charitable organizations they were claiming to be, but rather, fronts for for-profit companies who were doing a poor job of providing debt management and credit counseling services to debtors. The IRS audits are uncovering the sad fact that most of the debt counselors at these agencies have absolutely no training and are completely unqualified to dispense budgeting advice to anyone.

Unfortunately, despite the IRS audits, too many credit counseling services are only interested in getting as much money as they can from consumers and have no real interest in helping them resolve their debt problems, regardless of what their advertising claims and it's very hard for the average consumer to know which services are honest and which are not.

If you decide to seek credit counseling, don't just assume that every agency is a good one just because it is a non-profit. Some credit counseling companies are more ethical that others, however, never forget that most of them are in this business because it is highly profitable. Ask a lot of questions and don't believe all the hype that will be thrown your way. Specifically, get answers to these questions:

(1) How does company derive its income (fees, contributions from creditors, grants)?
(2) How much training do the counselors have?
(3) How much time will I have discussing my problems with a counselor? (Should offer at minimum 90 minutes of counseling)
(4) What is involved in the counseling process and what information do counselors use to evaluate my situation?
(5) What are your fees for each service and what is the most I will have to pay? (A good sign that a company is not a good choice is if they are mainly concerned with you sending in an enrollment fee right away.)
(6) Will I be able to access my account information on a regular basis or perhaps online?
(7) Make sure you know which debts will not be covered in the plan before you sign up since some creditors do not participate in these plans.
( What guarantee is there that they will pay your creditors and that they will do it before the due date (this has been a serious problem in the past, so much so, that the FTC is currently investigating more than 50 counseling services for failure to pay creditors)
(9) Are they going to help you work out a budget and learn some basic debt management skills?
(10) Ask them if they are licensed.
(11) Ask them if counselors are paid based on the number of new clients they sign-up (if so, go somewhere else)

Read the contract thoroughly before signing it as you might find there are hidden sign-up fees. For example, a common complaint consumers have with credit counseling services is that they claim they were never told that their first two payments would not go to creditors; instead, they would go to the credit counseling service. Make sure this doesn't happen to you.

How Do I Find a Reputable Credit Counseling Service?

The consumer group who publishes Consumer Reports magazine recommends that debtors find a credit counseling services through their area Yellow Pages. Specifically, they recommend counseling services who are members of Consumer Credit Counseling Services (CCCS) which has a reputation of offering solid, affordable (or free) in-depth counseling. Find a local CCCS affiliated agency and receive an hour of free, no obligation credit counseling before you decide to sign-up with any credit counseling service. You can also select a credit counseling service from the list of approved credit counselors who are allowed to offer counseling services to those preparing to file bankruptcy.

If you are looking into one, please check them out thoroughly, go to the Better Business Bureau to see if they are legit and to see if anyone filed complaints against them. If there are some really good ones out there that you found helpful, then please post a comment and tell me about them.

Some information came from www.Bcsalliance.com (credit and debt solutions)