Take Counsel With Caution

With credit-card debt at record levels, the number of consumer credit-counseling agencies has mushroomed — and so have deceptive practices, say two advocacy groups, the Consumer Federation of America and the National Consumer Law Center.

Credit counselors offer services from budget advice to hands-on bill management. Signs that you may benefit from such help can be obvious — you're behind on payments — or more subtle — you spend more than a quarter of your after-tax income on nonhome, noncar debt. There's no quick way to check an agency because the industry is largely unregulated. But here are some pointers:

--Fees are rising nationally. Insist on finding out about all fees (and which are voluntary) up front. Most agencies are nonprofit; this doesn't ensure quality.

--Beware agencies that don't explore at length what you earn, spend and owe before offering a "debt-management plan." Under such a plan, you'd send the agency one monthly payment to be disbursed among creditors, usually in exchange for lower interest rates. A plan should cover all unsecured debt (including things like debts to tradespeople and doctors' bills). Find out what interest-rate breaks you'll get and how long it will take to pay off all your debt.

--Some states require registration of one kind or another; ask your consumer-affairs office.