WHEN YOUR BILLS become unmanageable, turning to a business that offers help in solving debt problems may seem like a good solution. Be careful. Check them out with your local consumer protection agency or the Better Business Bureau in the company's location, before you do business with any company.

In your haste to on top of your bills, be careful of ads that offer quick fixes, such as ads in newspapers, magazines, via email, or even telephone directories that say: Consolidate your bills into one monthly payment without borrowing or STOP credit harassment, foreclosures, repossessions, tax levies and garnishments or You have been pre-approved for a loan. Be sure to read between the lines.

These may offer you your much needed debt relief, when they say that a bad credit history can be erased or that debt consolidation can quickly cure credit problems. Or they may offer to consolidate your loans into one loan with no credit check. Most often, you will pay exorbitant fees or interest rates for unnecessary services.

Other ads declare easy ways consumers and small businesses can get low-cost loans, even without a credit check or collateral. In many cases there are up-front fees or never lead to a loan being secured. Or they turn out to be home equity loans that carry high interest rates, oppressive payment terms, and the risk of foreclosure on your home.

Advance-Fee Loan Scams

These scams target those with bad credit problems or with no credit. For an up-front fee, as high as several hundred dollars, these companies guarantee that you will get the credit card or a personal loan you want. These companies often use delivery systems other than the U.S. Postal Service, such as courier services, to avoid detection and prosecution by postal authorities for mail fraud. But legitimate creditors never guarantee in advance that you'll get the loan, and to do so may be illegal.

A legitimate offer for credit from a bank or mortgage broker requires your verbal or written acceptance of the loan or credit offer, subject to a credit report check after you apply, to make sure you meet their credit standards. You should not be required to pay a fee to get the credit, however legitimate lenders may require payment for a credit report or appraisal, and there may be a small processing or application fee.

Credit Repair Scams

If you see ads that say they will remove bankruptcies, judgments, liens, and bad loans from your credit file, and/or guarantee they will repair your credit - be careful. Don't believe these statements. They're just not true as there's no quick fix. Only time, effort, and a plan for repaying your debt will improve your credit report.

Be wary of anyone offering to erase your bad credit record by creating a new identity for you, perhaps by ordering a new Social Security number. That's illegal.

The Only Solution

If you have debt problems, immediately contact your creditors. Don't wait until your accounts are given to a debt collector. Usually creditors will work with you on a solution, especially if you've had a good record in the past. If you can't solve your debt problems on your own or with the help of lenders, there are other reliable sources of help, including state and local agencies that also offer credit-counseling services for little or no charge.

The Credit Repair Organizations Act

By law, credit repair organizations must supply you with 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 outlines out your rights and obligations. Read these documents before signing the contract. The law contains specific consumer protections. For example, a credit repair company cannot: