When settling credit card debt, watch out for scams

•The company claims it can eliminate all of your debts. These companies provide, for a fee, a document that purports to absolve the consumer from credit card debts because the original line of credit was illegal. Consumers who fall for this scam end up with higher debts, ruined credit and calls from a collection agency.

There are low-cost alternatives to debt settlement. Call your lenders and see if they're willing to negotiate with you directly.

Another option is a non-profit credit counseling agency, says Chuck Bell, programs director for Consumers Union. A credit counselor may be able to negotiate a debt-management plan with your lenders that allows you to repay your debt over time, sometimes at a lower interest rate.

You can find a credit counselor in your area at www.debtadvice.org, the website for the National Foundation for Credit Counseling, or www.aiccca.org, the website for the Association of Independent Consumer Credit Counseling Agencies.

Ideally, Bell says, "You're going to get an independent source of advice, not somebody who is going to profit from your misfortune."

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

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