Last year nearly 1.5 million consumers turned to the bankruptcy court system to seek relief from their debts. Much of that debt was consumer debt racked up on credit cards. Medical bills were the second largest cause of debt.

Along with the rise of bankruptcy cases there is a veritable explosion of nonprofit credit counseling agencies seeking to "assist" consumers with their debt management. Unfortunately, the name does not always describe the company these days.

Some state regulators and even the IRS are starting to investigate these counseling companies for fraud and other corporate no-no's.

Example 1: Nonprofit company A is hooked up with for-profit company AA. When a client comes to company A, they pay a "voluntary" fee and then are set up with company AA which makes them a debt consolidation loan. Ergo, no counseling took place, lifestyles did not change, and the consumer will be back in credit card trouble again within a few short years.

Example 2: Nonprofit company C sets up an easy-once-a-month repayment plan for the client. The fee for this plan can range from a small "contribution" to equal to one months repayment amount. Then the company fails to pay the bills on time, or at all, and the client winds up with a worse credit history.

What can you do to protect yourself from these for-profit nonprofits?

Hopefully, the IRS will soon weed out the bad companies from the legitimate counselors. The time estimate is from a year to more than five, and that's if the companies have not met the letter of the law and are blatantly breaking a law. Until the bad apples are shut down you have to do your homework and find a good counseling organization that will help you set up a budget to ensure that you can afford the repayment program.

When looking for a debt counseling company, I recommend that you go online to www.google.com, and type in Consumer Credit Counseling Service (CCCS) plus your state or city. This will help you narrow your search down to the members of the Consumer Credit Counseling Service in your locality. Also, you can look at www.nfcc.org which is the website for the National Federation of Consumer Counselors, many of whom operate under the label of Consumer Credit Counseling Service. This label is a term used only be accredited agencies who are true non-profit agencies legitimately operating for the good of the debt burdened public.

One final word of warning, if it sounds too good to be true, it probably is. When you seek a consumer counselor to help you set up a debt management program, don't sign anything unless they actually counsel you and help you set up a budget you can live on and still make the monthly payments to pay off your debts.

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