A debt settlement company's enticing ad can be appealing to financially-stretched consumers: "Reduce debt by 50% or more in a matter of months, pay only pennies on the dollar of your total balance owed."

Promises such as this one provide hope, but can also be too good to be true. Some advertisements even show President Obama and mislead people into thinking government programs can help get them out of debt. Today, many want to believe these deceptive debt settlement ads and commercials because their financial burden is crushing them. So they sign on the dotted line and hand over exorbitant upfront fees, without ever seeing a modicum of proof that a settlement will be secured. Don't be fooled, make sure you do your homework before trying to consolidate debt.

Some debt settlement firms don't pay off creditors on a monthly basis; instead they collect money from you over a number of months and place it in a fund until they have the entire amount due. During that time, creditors can sue for non payments. To make matters worse, people who call debt settlement companies may speak to a telemarketer, who is relying on a company's pitches to make a sale and not worried about the financial-well being of the consumer.

A recent rule approved by the Federal Trade Commission is aiming to stop these types of shady business practices. The FTC gave the industry a tongue-lashing in a 229-page document which revealed some of these companies garnered a mere 1% success rate with clients. The new ruling also is pegged to make upfront fees a thing of the past and muffle the many too-good-to-be-true claims about debt consolidation. However, the new rule only covers debt settlement products that are sold over the phone; so deceptive practices may continue to lurk on the Internet. In any event, investigate all your options before signing up for a "debt relief" program. The trick is knowing which one is right for you. There are many resources available to help you make an informed decision.

Credit counseling is one alternative debt-help method available. These agencies employ certified credit counselors who work for the organization and pledge to have the client's best interest in mind. This process begins with a one-on-one meeting to form an individualized plan, which includes a budget analysis. If the person is eligible, a payment program is setup so the creditors get paid monthly. Interest rates may be lowered or eliminated, and because payments are being made, their credit score remains unscathed. The client pays an agreed upon set-up and monthly fee until the debt is paid off. And if the person isn't eligible for this service, most credit counseling agencies offer other debt relief and financial education options.

Again, when in a deep hole of debt, don't grab any rope you see without knowing where it will take you.

Howard Dvorkin, CPA, is a national known personal finance expert and consumer advocate who has been in the field for more than 15 years.  He is the founder of Consolidated Credit Counseling Services, Inc., and the author of Credit Hell: How To Dig Out of Debt.