Credit counseling services are agencies that will help solve your financial problems. Many of them work for free or for very low cost.

Be careful in picking which company to use. Some companies charge high fees and may not have your best interests at heart.

Before using a credit counseling service, consider negotiating with creditors on your own. Also consider whether or not bankruptcy might be better for you. Since credit counselors receive their funds from your creditors and sometimes from fees they charge you (often on a monthly basis), they generally won't recommend bankruptcy -- even if it's your best option.

Keep in mind that if you settle a debt for less than the amount owed, the transaction becomes a negative on your credit score and stays on your credit report for seven years. You may also owe income tax on the amount forgiven in a settlement. To learn more about the tax situation, see IRS Publication 4681 which is available at: www.irs.gov/pub/irs-pdf/p4681.pdf   or speak with your accountant.

NOTE: Credit counseling services are not credit repair services. Credit repair services promise to repair your credit for a fee. In reality they cannot do anything about your credit that you cannot do on your own.

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