Even with a full-time job, Carmen Garcia had piled up a modest mountain of credit card debt.

Her Target store card was brimming every month. Her American Express plastic was loaded up with $8,000 in charges, mostly for gas, groceries and household expenses. She bought a new Kirby vacuum from a door-to-door salesman – and charged it.

By last spring, the tally had swelled to an uncomfortable $18,000.

Although the 55-year-old Sacramentan says she was paying a little over the minimum payment each month, it was like chipping away with a teaspoon. Worried she'd never dig her way out of debt, Garcia turned to one of the hundreds of "debt settlement" companies that promise, for a fee, to eliminate consumers' unpaid bills by negotiating with their creditors.

In ads that blaze across TV screens, radio airwaves and computer screens, they promise results like "getting out of debt easy … while saving you thousands!"

In Garcia's case, that's not exactly how it turned out.

After making $250-a-month payments since June to a San Diego-area company, Garcia says she's financially worse off than when she started. Not only have her credit card bills not been whittled down but, by following the company's advice to stop making payments, she says she's now getting calls from creditors.

"I'm scared. I now owe them even more money because of late fees and interest," said the state employee, who asked that her real name not be used.

She's one of thousands of consumers nationwide each year who sign up with so-called "debt settlement," "debt relief" or "debt negotiation" companies. By whatever name, they can be risky.

And – in an economy hobbled by layoffs, foreclosures and a credit crunch – they're attracting more interest from overloaded consumers.

Stephen Cox, spokesman for the national Better Business Bureau, said there's been a recent "spike" in inquiries from U.S. consumers asking about debt negotiation companies.

Based on nearly 100,000 inquiries last year alone, he said, "our complaints will be up in 2008."

Gayle Weller, consumer protection analyst with the state Attorney General's Office, said her office has seen a similar surge in calls. Some debt companies, she said, "play on people's ignorance and their desperation."

Plenty of consumer groups warn consumers to be wary.

Folks in financial hot water can find themselves in "water that's even hotter," said Barry Goggin, president of the Better Business Bureau of Northeast California, based in West Sacramento. "Sometimes they're grasping at life preservers without knowing who's holding the other end."

In California, debt settlement companies are loosely regulated by the state Department of Corporations. Earlier this year, state Assemblyman Ted Lieu, D-Torrance, authored a bill to ramp up regulation of debt settlement companies, which he says have been "operating under a decades-old law not designed for the current environment."

His bill, designed to protect consumers from getting "scammed by a bad company," would require more stringent licensing, caps on fees and more consumer disclosures. It passed the Assembly this year but died in a Senate banking committee. Lieu plans to revive it in 2009.

There are plenty of reputable companies out there to provide debt counseling and money management. To find the right one requires some homework.

The company Garcia went to, Debt Free Associates Inc., based in Carlsbad, has a "B+" rating from the Better Business Bureau, based on its years in business, and no record of complaints, according to the BBB Web site.

After The Bee contacted Debt Free about Garcia's complaint, branch manager Bradley Smith said she would get "a full refund" of the $1,450 she'd paid the company.

Smith said there was "a misunderstanding" on Garcia's part as to which program she was enrolled in.

"We were really disappointed that she chose to go another route," Smith said in an e-mail, "but the last thing we want is a client leaving us in a worse financial position than when they enrolled, so we refunded all of her money."

If you're trying to get your debts reduced, try the do-it-yourself approach first, say Weller and other consumer advocates. Call your creditors directly and ask about better repayment terms and lower interest rates.

If that's not successful, look for a company that provides credit counseling.

"If you need help managing your money, there are reputable credit counseling organizations that can advise you, help you develop a budget, and offer free educational materials and workshops. They can sit down with you and discuss your entire financial situation … to solve your money problems," said Federal Trade Commission spokesman Frank Dorman.

Also be careful about jumping too quickly into a "debt management plan," or DMP, where you pay a monthly fee to a company that pays down your debts, based on lowered rates it negotiates with your creditors.

Even if your credit card debts get paid off at reduced rates, those charge-offs can cause long-term damage to your credit rating. As the BBB's Goggin put it: "Your bad debts will drop your credit score like a ton of bricks."

For more tips on how to choose a debt settlement or credit counseling company, see accompanying box.

Call The Bee's Claudia Buck, (916) 321-1968.