Should you consider debt consolidation? These services can put the financially overburdened on the track to debt freedom - your money

Q I'm having trouble paying my bills on time. Can a debt-consolidation agency help me?

A Your ability to get back on track and consistently pay your bills by their due date is critical to recovering your credit standing. Here's how to tell if debt consolidation is something you need to consider.

Evaluate your position: Run the numbers for a clear snapshot of where your money is going. Write down the exact details of your income and expenses for two months. Now add up all your debts and total the minimum payments due on each.

Financial planners say if you can afford to pay double the amount of all your minimum payments each month and still put away at least 10 percent of your income in a savings fund for emergencies, you just need a disciplined spending plan so you can accelerate paying off debts. Can you get a cheaper cellphone plan or make do with basic cable? You'd also be surprised at how much you can trim from your monthly out-of-pocket expenses by making a weekly shopping list for groceries and personal-care items and sticking to it. Avoid using credit cards and refrain from unscheduled trips to the ATM. Call each creditor with whom you've been delinquent and ask to work out a payment plan, and again, stick to the plan.

Know when you're in over your head: Several of the following factors combined can signify that you need professional help. * Your voice mail is filled with messages from debt-collection agencies. * If you buy items on credit you should buy with cash (groceries, personal-care items). * If you regularly skip some bills to pay others or take credit-card cash advances or borrow money to make ends meet until payday.

If these situations are familiar, you're not alone. Nine million consumers sought credit counseling last year. Your level of debt, your level of discipline and your prospects for increased income are key indicators of the kind of help that's right for you. In addition to simple budgeting and credit counseling--but before bankruptcy--there's debt consolidation. But only about 33 percent of those who seek debt consolidation qualify for this service.

How it works: Members of the trade group National Foundation for Credit Counseling ([800] 388-2227 or nfcc.org) can be a source of low-cost credit-counseling services--$50 maximum to set up your account and no more than $20 a month in administrative fees. (If charges are higher, find another agency. And check the agency's reputation with the Better Business Bureau.)

Based on your income and debt, certified credit counselors will contact and negotiate with all your creditors to agree on a consolidated monthly payment amount. Every month you send the agency a single payment that is portioned out to each of your creditors until your debts are paid off. Most accredited debt consolidators can arrange with your creditors to reduce or waive interest and late fees. It's important that the debt-consolidation program have an educational component to teach you the money-management skills that will keep you dedicated to managing your future debt appropriately.

Valerie Coleman Morris is an anchorwoman with CNNfn.

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