Which is Best?

You've seen the ads: credit counseling companies say they can help with debt by getting your payments and interest rates lowered.

Others claim they can get your debts wiped out entirely by settling them for pennies on the dollar.

So which is better for your situation?

If you're in debt trouble, you've got plenty of company.

And you've got lots of people willing to help you too. For example, credit counselors:

“A credit counselor with work with the client and reduce the debt over time, and you will pay...in many cases...a lower interest rate or no interest rate at all," said Jessican Cecere from Consumer Credit Counseling.

So a credit counselor gets between you and a creditor, tries to negotiate better terms and sets up a plan to repay all your debts over time: generally 3 or 4 years. And the cost is generally between 10 and 50 dollars a month.

But credit counseling isn't the only game in town. Debt settlement is also popular: that's offering to pay a one time lump sum of less than you owe and wiping out the debt in one fell swoop.

"Debt settlement...the argument for is that you can negotiate the debt, hopefully at a lower, reduced amount...pay it off once, and be finished with that creditor and never have to worry about it again,” said Kevin Hagen from a credit repair law firm.

So with debt settlement, you or someone you hire, is negotiating with the creditor to pay a chunk of what you owe and have the rest of the debt forgiven. Costs for this service vary widely: from a couple of hundred up.

Either of these methods might work depending on your circumstances.

But if you're hiring help, be extremely careful. There are bad apples in both camps, and they're not always easy to spot.

A good rule of thumb is the bolder their claims in their ads, the less they should be trusted.