Over a million Americans file for bankruptcy annually. With household debt climbing and mortgage rates set to increase for millions, many Americans hope to stave off bankruptcy through credit counseling. The rapid growth of this industry has created an opportunity for criminals and exploiters. You should do careful research before committing to a credit repair idea. An attorney with experience in bankruptcy law can help you to determine the best course of action. The best course of action is rarely to engage their services.

You should be very careful with companies that claim to help you repair your credit rating. In most cases, consumers spend large amounts of money in fees and charges for no result. Often, they find that once the money changes hands, the "company" disappears overnight. The following signs can indicate a scam:

• The company fails to tell you about actions you can take yourself for free.
• The company asks for payment up front.
• The company tells you not to directly contact the credit bureaus.
• The company suggests getting an Employer ID Number from the IRS, to set up a "new" credit report.
• The company tells you to dispute everything in your credit report.
• The company suggests illegal action. If you commit fraud, even if it's on the company's instructions, you will be open to prosecution.

There are credit counseling agencies that will help you to reduce your debts and move towards repaying them. However, there are also scammers that pose as credit counselors. These scammers often promise to contact creditors and reduce payments or interest rates. They promise a quick fix, telling you they can give you a clear slate in return for an up-front fee. Before you agree to anything with a credit counseling agency, research the firm carefully. Take the following steps to avoid getting scammed:

• Only deal with recognized and reputable agencies. Your local Better Business Bureau and state consumer agency can tell you if consumers have lodged complaints against the agency, and how those complaints were resolved.
• If something is too good to be true, it probably is. Be wary of anything that sounds like a quick fix.
• Try to stick with non-profit organizations. There are reputable profit-based credit counseling companies, but it will take more work to determine if they're on the level.
• Make sure that the organization offers counseling and education, not just financial services. This will help you remain debt-free in the future.
• Read any agreements carefully. The agreement should describe all costs, timelines, payment terms, and guarantees in detail.
• Do not pay up-front fees. While reputable agencies may charge a small monthly fee, your initial consultation should be free.
• Be wary of required fees or contributions that actually add to your debts.
• Some credit counseling agencies ask you for a lump sum, which they redistribute to the creditors. Call your creditors to confirm all payments.

If you fall victim to a credit repair or counseling scam, an attorney with experience in bankruptcy or consumer law can be an invaluable resource.