Know your options if seeking help with debt

— -- The national household debt now totals $13.3 trillion, and although millions of Americans are in financial distress, not many are seeking help. Some worry that they'll get ripped off by debt scams. Others don't think they can afford to pay for the advice they need.

For those getting crushed under the weight of what they owe, the key to taking advantage of debt relief is avoiding traps and understanding your options, because not all of them can fix every problem. And you should know about industry reforms. What are the different types of debt relief — and factors you should keep in mind?

Credit-counseling agencies

Non-profit credit-counseling organizations can offer free or low-cost education and counseling services for those whose debts are getting out of hand but aren't yet financially crippling. If you're living paycheck to paycheck and aren't sure what to do, counselors can provide basic advice. Without trying to sell you something, they can show you how to manage your finances by cutting back on spending and keeping up with bill payments.

Debt management plan (DMP)

If you're falling behind on your bills, the credit counselor can then suggest other options. One thing that credit-counseling agencies themselves can offer is a DMP.

Although you can contact your creditors and try to set up a DMP on your own, if you're under extreme stress, you might want a reliable credit counselor to handle it for you. They'll negotiate with creditors for a lower monthly payment and lower interest rates, and sometimes can get creditors to waive late fees and over-limit fees.

During the recession, the traditional DMP didn't help many consumers because they owed too much money. The National Foundation for Credit Counseling (NFCC) came up with another repayment plan, "Call to Action," that most financial planners offer to provide deeper concessions for consumers who need it.

For the traditional DMP or Call to Action, you have to be able to make regular monthly payments to the counseling organization. But some consumers are so far behind, they might not even be able to handle those payments.

To address that, the Association of Independent Consumer Credit Counseling Agencies (AICCCA) is working with creditors to develop a program in which debtors pay less than the full balance without having to resort to a debt settlement plan.

To qualify, consumers would have to show their expenses and spending patterns over time.

Debt settlement

A more serious option is debt settlement. This is an industry that developed to fill in the gap between credit counseling and bankruptcy, says Joel Winston, director of the division of financial practices at the Federal Trade Commission. "These are for people who can pay part of their debt but need a substantial reduction before they can do that."

For-profit debt-settlement firms claim that they can negotiate with creditors to reduce the amount you owe. But there is no guarantee that creditors will agree to partial payment. The industry has come under so much criticism that last year, the FTC approved a rule that prevents debt-settlement companies from charging upfront fees before the settlement was actually negotiated.