Warning

• The Federal Trade Commission (FTC) warns consumers to avoid companies that promise to pay off your debts "for pennies on the dollar," requires monthly service fees, tells you to stop making payments to and communicating with your creditors, or claims that they can remove negative information from your credit report.
  
  

Example

• The FTC has prosecuted over a dozen companies for deceptive offers of debt relief. One of the biggest was AmeriDebt, Inc., which claimed to be a non-profit credit counseling service. This company kept money from consumers that was supposed to go toward debt reduction and funneled profits to its affiliates. The case was settled for $35 million.
  
  

True Solutions

• The FTC lists "realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy," as viable options for consumers and offers comprehensive information on each one. Universities, credit unions, military bases and branches of the Cooperative Extension Service frequently offer reliable, free credit counseling.