If you’re drowning in credit card debt, behind on all your bills or unable to make headway on your student loan payments, ads on TV for credit counseling services that promise to lower your interest rates may seem too good to be true — and sometimes they are.

If you don’t have enough money to make even modest monthly payments on a debt, bankruptcy may be a better solution, says Equal Justice Wyoming, the state court system's civil legal-aid program. But if you’re able to make small payments that would get rid of your debt in five years or less, a legitimate credit counselor may be worth using.

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Legitimate credit counseling agencies such as Money Management International negotiate lower interest rates from creditors, which translates into lower monthly payments. The credit counselors do this by persuading creditors to drop their interest rates if you agree to enter a debt management plan. For the plan, the agency may ask you for a modest enrollment fee and a nominal monthly processing fee for processing your payments every 30 days.

In some cases, your interest rate may plummet from 29 percent or more to 2 percent.

These credit counseling agencies, which are usually bankrolled by the creditors, may also offer low-cost or free classes that can help people with such things as budgeting or buying their first home. As a sign of the times, some even feature counseling on student debt.

Caveat emptor

Some unscrupulous agencies make unrealistic promises and can land you in even hotter water.

If a credit counseling service employee asks you to pay him to remove bankruptcies, judgments, liens and bad loans from your credit file, that service is likely a scam, according to the Federal Trade Commission (FTC).

“This so-called industry is notorious for ripping off consumers,” says Joe Ridout, consumer services manager for the San Francisco-based nonprofit Consumer Action. “We recommend consumers consider not paying anyone that promises to repair their credit. People get nothing in return other than possibly damaging their credit.”

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Where to get started

Before signing up with a credit counseling agency, make sure it is a member of either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies, the industry’s primary accrediting organizations, says Gerri Detweiler, director of consumer education for the consumer credit education website Credit.com. She also advises checking out the Better Business Bureau to see if consumers have filed any complaints against the agency.

In addition, make sure the counselor is licensed to do business in your state. And stay away from any group that asks for a large upfront fee.

With those caveats in mind, Detweiler says credit counselors can be extremely helpful.

“They offer variety of different services at little or no cost, so there are a lot of reasons to talk to a counseling agency if you feel like you aren’t making financial headway,” she said. “As long as they are legitimate, there are not many reasons not to reach out to them.”

The FTC notes that most credible credit counselors are non-profit, but it cautions that non-profit status “doesn’t guarantee that services are free, affordable or even legitimate, ” so buyer beware.

Related: 3 Times Declaring Bankruptcy Could Save Your Financial Life

Before engaging a credit counseling agency, the FTC suggests asking questions:

  • What services do you offer? Look for an organization that offers a range of services and avoid ones that that push a debt management plan as your only option before analyzing your financial situation.
  • Are educational materials available for free? Avoid organizations that charge for information.
  • Beyond my immediate financial problems, will you help me develop a plan for avoiding problems in the future?
  • What are your fees?
  • What if I can't afford to pay your fees or make contributions? If an organization won't help you because you can't afford to pay, look elsewhere for help.
  • Will I have a formal written agreement or contract with you?
  • Are you licensed to offer your services in my state? 
  • What are the qualifications of your counselors? Are they accredited or certified by an outside organization?

You can find more information in the FTC guide Credit Repair: How to Help Yourself. With any luck, you’ll be digging yourself out of debt in no time.

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Daniel S. Levine is an award-winning journalist who heads the Levine Media Group and hosts The Bio Report and RARECast podcasts. He was an editor of The Burrill Report and worked for the Oakland Tribune, Adweek, the San Francisco Business Times and other publications.