In today's economy, it can be hard to make ends meet. Even as many couples decide to have both spouses work, the high cost of living in many areas stretches family budgets to the limit. Given how vulnerable many people's financial situations are, a single unforeseen event, like a layoff or other reduction in income, can create a chain reaction that threatens to derail a family's entire financial plan.

Along with rising debt levels and increasing pressure to manage finances, the number of credit counseling agencies has ballooned in recent years. Because of revisions to bankruptcy laws and new requirements imposed by the Bankruptcy Reform Act of 2005, many borrowers are required to seek credit counseling before they can file for bankruptcy. Yet credit counseling agencies paint themselves as problem solvers, even for borrowers who aren't facing bankruptcy. If you're in financial trouble and looking everywhere for help, these sales pitches can be extremely attractive.

The catch
Unfortunately, credit counseling businesses have become a haven for disreputable people seeking to pray on consumers desperately seeking solutions to their debt problems. While plenty of legitimate credit counseling agencies exist -- many of which are nonprofit businesses -- they won't necessarily be the ones you see advertising on television or the Internet. And nonprofit status alone doesn't ensure that an organization has your best interests in mind.

To protect yourself, it's helpful to understand the business model that allows credit counseling agencies to make enough money to help borrowers like you. For the most part, credit counseling agencies don't get much of their revenue from the borrowers they serve. Instead, most agencies have agreements with credit card companies and other lenders; the agency sets up plans for borrowers to repay their debt, then gets a portion of those repayments for itself. For instance, if you have a credit card with Citibank (NYSE:C) or Bank of America (NYSE:BAC) and you visit a credit counseling agency, the odds are good that the agency will receive something back from those card companies. Because lenders often write off loans that are in default, obtaining even a portion of the money they're owed can be an unexpected bonus. That makes lenders willing to reward credit counseling agencies for their role in getting their customers to repay their debt.

Though most reputable credit counseling agencies make little money from their customers, some disreputable agencies take advantage of prospective customers by exacting substantial fees for their services. In some cases, agencies have charged borrowers thousands of dollars in exchange for promises to erase any blemish from their credit ratings. Other agencies help themselves to money supposedly earmarked to repay creditors; that not only results in unexpectedly high charges for their services, but it can also lead to additional delinquencies with a borrower's credit card and other loan accounts. At a time when most consumers can least afford to make mistakes, too many con artists hold themselves out as credit counselors, taking steps that jeopardize debtors' last-ditch efforts to repay what they owe.

Doing it yourself
Depending on your particular situation, you may be able to handle your own debt resolution, using some of the strategies that credit counselors use on behalf of their clients. For instance, if you have debt at high interest rates, and high monthly payments are starting to get out of your reach, call your creditor to see whether they'd be willing to lower your rates. Using low-interest balance transfer options with other creditors to refinance your debt is another option, although you need to be careful here; transaction fees and other provisions can result in a huge interest rate hike on your account. The earlier you foresee a potential problem, the easier it is to negotiate more favorable deals; if you wait until you've missed payments, you'll lose some of the leverage you have to seek more favorable terms from other creditors.

If your situation is already dire, however, it may be time to consider a credit counseling agency. If you're unable to make minimum payments on your debt, getting harassing phone calls from collection agencies, or have already tried unsuccessfully to negotiate more favorable terms with your creditors, a credit counseling agency can be a good way to proceed.

Counseling and your credit rating
Regardless of what some agencies claim, the steps that credit counseling agencies take to help you manage your debt can sometimes hurt your credit rating. While using an agency by itself rarely has a big effect on your credit, the different ways that lenders treat the concessions they make may result in adverse entries on your credit report. For instance, in some cases, lenders may treat reductions in payments as delinquencies or writeoffs, which can hurt your credit rating. However, as long as your lender doesn't report your reduced payments in a negative way, the FICO credit score that's calculated by Fair Isaac no longer penalizes borrowers for using for credit counseling agencies.

The best way to handle potential debt problems is to avoid them by keeping a careful watch on the amount of debt you incur. However, if unforeseen circumstances make it impossible for you to stay on top of your debt load, credit counseling agencies may be able to give you some options that you wouldn't have on your own.

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Fool contributor Dan Caplinger once convinced a credit card company to write off half of a client's credit card debt in exchange for a quick payment of the rest. He doesn't own shares of the companies mentioned in this article. The Fool's disclosure policy won't default on you.