In over your head? Tips for finding a credit counselor

Banks have it, big time, as a result of bad investments, but they're getting a helping hand from the federal government.

If you have overwhelming debt -- also from bad investments, or maybe a job loss, a medical crisis or just plain overspending -- you're probably on your own.

Credit counseling groups claim they want to help you -- it's hard to turn on the television or radio these days without hearing their advertisements. Some promise to make your debts disappear, almost like magic.

Don't be fooled. Though some do legitimate work, many credit counseling companies charge more than their advice or services are worth, according to the Federal Trade Commission. In some cases bogus counselors make financial situations worse.

There are legitimate nonprofit credit counselors that work free of charge or for modest fees. They play by the rules and can help you put together a sane strategy for debt relief.

Here are some guidelines on how to find them, culled from consumer advice put forth by the Federal Trade Commission and the National Foundation for Credit Counseling.

Check out the FTC's online tips at www.ftc.gov/bcp. Click on "Credit counseling" about halfway down the page. The credit counseling foundation's guidelines can be found at www.debtadvice.org. Click on "Personal Plans & Solutions" and then on "Guidelines for Selecting the Right Credit Counselor."

* The fact that a credit counseling company labels itself nonprofit is no guarantee of legitimacy. It can still rip you off.

* A company should be willing to offer you information about its services free of charge. If a fee is required just to get basic info or an introductory meeting, go elsewhere.

* Ask how employees are compensated. If they get a commission for signing you up for additional services, it's a red flag.

* A "guarantee" that a company can remove your unsecured debt should guarantee that you get out of there, quick. No legitimate counselor would make that too-good-to-be-true offer.

* Be wary of a company that tries to immediately steer you toward a formal debt management plan. A DMP, by which a company handles your debt payments from a monthly deposit you make, is a serious step that should be considered only after a thorough examination of your situation.

* If a company offers bankruptcy as its only or primary option, try a different counselor.