You see and hear them everywhere — advertisements promising to reduce or eliminate your debts.

Some of these debt resolution agencies may be legitimate, but most agencies do not have the in-depth knowledge or the legal ability needed to fully protect the interests of their clients. Before you sign on with a debt resolution agency, you should compare what they can do versus what a bankruptcy attorney can do.

Be Wary of Debt Resolution Agencies

If you are not careful, you can dig yourself a much deeper hole than the one you are in now. Before you work with a debt resolution agency or petition preparer, get the facts.

Debt resolution agencies are financial counselors who for the most part are unlicensed and uncertified. They fall into two general categories:

• Consumer Credit Counselors — in this model, the agency provides counseling in financial management techniques and consolidates a person’s debts into one monthly payment. There is one major problem with this approach — not all creditors may be onboard, and even those that are can take action at anytime to obtain a judgment against you. This leaves you with no legal protection.

• “Trash-Your-Credit” Agencies — these agencies collect a monthly payment that is put in a trust account. When there is sufficient money in the account, debts are paid off. Not all creditors may agree to the plan, and many creditors will grow impatient waiting for payment. You are unprotected during this time, and many creditors will seek a judgment against you.