The bad news: But even those rates are easier to swallow than some of the other consequences of debt consolidation gone wrong. The third-party industry that has sprung up around this need is rife with scams and hooligans taking advantage of an area that isn't as well regulated as Latko would wish. Even the nonprofit label is open to suspicion.

Fall into the wrong hands, and that $1,500 monthly payment you thought was conquering your debt in reality pays the third-party's service fees. Watson would run from any fees that exceed 15 percent of the total debt amount, and most reputable firms charge lower than that, he says.

Check accreditation with associations like the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies before signing on the dotted line. Contact your local Better Business Bureau as a final safety precaution.

Be aware, too, that you'll pay for that negotiated price reduction in the form of a lower FICO score because no matter how you slice it, you altered what you agreed to. "The companies are giving you a discount to get you back on your feet, so they could report you as a bad credit risk," says Latko.

Watkins keeps his guard up for folks who offer what he dubs the "stretcher solution." When you do the math, he says, you'll find they simply lowered your payments by holding steady on the interest rate and stretching the payments out longer. The inattentive wind up paying more than they originally owed. Remember: Loans are middle school math equations made up of three components: payment, time and interest rate. Fiddling with any part of the equation automatically affects the rest.

If that 401(k) loan is looking pretty good right now, seriously weigh your job security before taking the plunge. Should you and your company part ways for any reason while the funds are missing, the total amount is due immediately or the loan becomes taxable and you could find yourself coughing up the government's 10 percent penalty for early withdrawal to boot. And keep in mind, while your money is absent from the plan, it's not generating any income in the plan.