When your bills become unmanageable, it may seem like a reasonable solution to turn to a business that offers help in solving your debt problems. But be cautious. Before you do business with any company, check it out with your local consumer protection agency or the Better Business Bureau.

• Be on the alert for advertisements that offer seemingly quick fixes. While some ads promise debt relief, they rarely mention that this relief will come in the form of bankruptcy. Bankruptcy is one option to deal with financial problems, but it's generally considered the option of last resort. Why? Because it has a long-term negative impact on your creditworthiness. A bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live.
• Be wary of any company that doesn’t tell you your legal rights and what you can do — for yourself — for free.
• Never give your credit card account number, bank account information, Social Security number, or other personal information out to any company (either over the phone, through email, or on a form on a web site) unless you are familiar with the company and know why the information is necessary.
• Be suspicious of anyone who calls you on the phone and says they can guarantee you will get a loan if you pay in advance. Legitimate creditors never guarantee in advance that you'll get a loan. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan. (However, it is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal. You also may have to pay a processing or application fee.)
• If you decide to respond to a credit repair offer, beware of companies that:
  • want you to pay for credit repair services before any services are provided;
  • recommend that you not contact a credit bureau directly;
  • suggest that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security number;
  • advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution. You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

• By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract.

• Remember: Only time (seven years for most information, 10 years for bankruptcy information), a conscientious effort, and a plan for repaying your debt will improve your credit report.