In some cases, your debt will be too great to manage a pay-down program by yourself. If this is your situation, it's important to understand whom you are working with, what their motivations are, how they are compensated, and whether they are truly acting in your best interest.

Credit Counseling

Advisors experienced in credit counseling and budgeting often help you at no cost. They offer services focused on helping you work through a budget program and debt repayment. In many cases, these folks are honest and truly have your interests at heart. Be sure your counselor outlines any fees or other obligations on your part prior to engaging him. Also, be sure he is a member in good standing at one of the organizations listed in Appendix B.

If the counselor hesitates to answer any of your fee questions or seems to want to move too quickly to a debt management plan or debt consolidation, stop the relationship right away and either take on the program yourself or find a new counselor.

Debt Management Services

Under a debt management service, you pay the management company a preset amount and they, in turn, distribute your payments to your creditors. In theory, this sounds like the perfect solution. They deal with creditor phone calls, you just have one payment to make, you have a set schedule to follow, and you can see a light at the end of the debt-payment tunnel. Unfortunately, this is not always the case in practice. Many debt management services charge monthly fees that would be better off paid against the debt instead of to the service administrator. Payments can be lost or miscredited by the creditor receiving them. In some rare but frightening instances, disreputable debt management services have made no payments to creditors at all, and have simply made off with clients' money.

Deciding to use a debt management service doesn't mean you're off the hook for the payments. Keep a close watch on your statements. Make sure they reflect the payment agreed to through the debt management service. Make sure payments are credited on time, and be ready to send money quickly if they are not. Check in regularly with the management company and keep them up to date if your credit accounts are sold and the payment locations or amounts change.

Debt Consolidation

Consolidating your debt — paying down multiple balances with one account and then paying down that single account — can be convenient if you have many accounts. It can also save money if you have a way to transfer to tax-deductible debt such as a home equity loan. It's important to do a little bit of homework before deciding whether this is the best course.

First, have you adjusted your budget so new debt won't simply rebuild in the accounts you're paying off, leaving you in worse shape than you are now?

Second, can you really deduct the interest so it's cheaper than what you're paying now? Many people incorrectly think they can deduct 100 percent of their mortgage or equity-line interest. Income phase-outs and alternative minimum tax rules often reduce or eliminate this option. And don't forget that by converting the unsecured, high-interest debt into debt secured by your home, you may be putting your house in jeopardy.

Third, will consolidating save you money in the long run? Consolidating debt into a single loan with a lower interest rate or stretched over a longer pay-down schedule may make your minimum payments lower, but will it save you money? Lower interest might not help if the duration of the loan has been increased. You'll pay less interest per year, but adding years increases the total cost of the loan over time. Also, having one loan account full while other credit lines remain empty has a negative effect on your credit score. Creditors like to see good loan management. Moving to a consolidated loan or dumping all the balances into one credit card should be a last choice.

Where to Find Help

Check Appendix B for a list of organizations with advisor members that can help. Once you've decided what type of advice you need, it's important to interview two or three potential advisors. Don't be shy about asking tough questions. Before starting a relationship, you should know the advisor's experience with clients like you, how she is compensated, and what other alliances or incentives she may have. You should also feel that she is approachable and will be accessible if you have questions during the process. Her fees should be outlined in advance and should not be related to the amount of your debt or the type of debt.