How to Tell if It's Good Debt or Bad

A debt counselor can help you identify your most important debts, and figure out the most efficient way to pay back the rest of your creditors. What's more, a debt counselor can potentially make your debt more affordable by reducing the interest charges from some of your creditors.

Many credit-counseling services have agreements with unsecured creditors (e.g. credit card companies) that allow them to offer lower interest rates to consumers who are actively seeking help. "If consumers are on debt management plans, they can get their rates to drop from upwards of 21% to 24% down to 7% or 8%," says Reed. "That can help the consumer get his or her cards paid off a lot quicker."

Some creditors even offer hardship rates that can drop the interest charges even lower. Basically, if creditors can get their payments at a lower rate, Reed says, they'll often consider that better than getting nothing.

Finally, remember that while debt and credit counselors can make suggestions, it is up to you, as a consumer, to make sure you are spending your money wisely.