In theory, debt consolidation—bundling all your outstanding loans under a lower interest rate loan—sounds ideal. For anyone swimming in debt, the thought of having to make only one low payment a month is certainly enticing.

How easy would it be if you could take out a new loan to pay back all your preexisting loans?

Many debt consolidation companies prey upon this very idea, and often look to take advantage of you and kick you when you’re down. No matter how nice their representatives are or legitimate their websites look, many debt consolidation companies are dodgy and unreliable, and will end up costing you your money, or even worse, your credit.

Debt consolidation companies often hide behind their nonprofit status and then charge hidden fees in the form of steep “voluntary” contributions. The Federal Trade Commission exposed AmeriDebt, Inc., for example, for deceiving its customers and collecting at least $170 million in hidden fees.

Rather than taking its customers’ payments and in turn paying off their creditors as promised, AmeriDebt kept the initial payments as fees without ever informing their customers. Meanwhile, the customers who had trusted AmeriDebt to do its job inevitably and unknowingly fall behind on payments, which can be very damaging to their credit.

Good debt consolidation companies make money not through charging its customers monthly fees, but through kickbacks from the creditors (10% to 15%). This means that for every $100 that a creditor receives, $10 to $15 will be rebated back to the debt consolidator as profit. Any company that tries to charge you fees on top of this kickback may not have your best interests in mind.

When one woman decided to join American Debt Consolidation, which promised her lower interest rates, no late fees, and a shorter time period in which she could pay off her debts (and all for free!), she thought it was the answer to all her problems. However, because the first payment went straight to the company as a compulsory donation, she soon found herself paying money both to her creditors and to ADC in order to avoid falling behind on payments and incurring additional late fees!

Debt consolidation companies appeal to people who are drowning in debt, who don’t believe that they can pay off their debts on their own, and who are looking for a quick fix for all their money problems. In reality, however, there is quick and painless way to make debt magically disappear; it’s hard work, and debt consolidation companies that say otherwise are not the right fix for your debt problems.

Avoid any company that promises to repair your credit problems in a hurry. The road to financial stability typically requires ongoing counseling and can take years. Before you sign on with a debt assistance company, check it out with your state Attorney General and local consumer protection agency and Better Business Bureau . Make sure it’s a nonprofit firm that belongs to the Association of Independent Consumer Credit Counseling Agencies , the National Foundation for Credit Counseling (NFCC), or the American Association of Debt Management Organizations. NCFF members can use the name Consumer Credit Counseling Service (CCCS), or other names, but hold the NFCC member seal.

Unlike debt consolidation companies, which work with your creditors to lower your interest rates, these credit counseling services focus mostly on you. Credit counselors will help you create a debt management plan as well as teach you to take control in the long-term, better manage your money, and avoid similar debt problems in the future.