Editor's Notes: In response to a complaint about this story, on the 12th of March 2015 the Australian Communications and Media Authority (ACMA) found 7.30 to be in breach of standard 5.3 of the ABC Code of Practice. ACMA concluded that MyBudget was not given a fair opportunity to respond to specific claims made by two former customers who appeared in the story. 7.30 acknowledges the ACMA finding.

LEIGH SALES, PRESENTER: The number of Australians in financial distress is on the increase and few things add to the burden like the big cash outlays we all make at Christmas.

Tonight, financial counsellors are warning of a burgeoning new industry. Disturbingly, it's run by entrepreneurs trying to profit by offering to solve other people's financial difficulties.

It may sound like a contradiction, but there's apparently big money to be made.

As Greg Hoy reports, it raises serious ethical questions and can leave customers even worse off than when they started.

GREG HOY, REPORTER: Christmas: the time for giving, as a blizzard of TV ads love to remind us.

For millions of Australians facing financial difficulties, however, giving won't be easy. There are very different ads targeting them.

MY BUDGET TV ADVERT (female voiceover): Are your debts making you scared to answer the phone? There is help, and it's not taking out another loan.

GREG HOY: Early last year, ads for a debt management service called MyBudget caught the attention of Krystal Laffin in Renmark, South Australia. A single mother of two, at the time, she was struggling with repayments and at her wits' end.

KRYSTAL LAFFIN: It caused the break-up of me and my partner. I had people on my doorstep going to repossess my car. I had my car, which was over $1,000 in arrears, ready to get repossessed. My house was just about to get defaulted and that's what drew me towards MyBudget. Because I was trying to handle it by myself plus working two jobs and all that sort of thing. So I just thought, "Why not give it a try? They handle everything."

TAMMY MAY, FOUNDER, MYBUDGET: We're finding all of the cities, there's a growth in people feeling that the financial strains, particularly around the rising cost of utilities.

GREG HOY: MyBudget has made its glamorous founder, Tammy May, very rich. Named Telstra's South Australian Businesswoman of the Year. BRW estimates her personal wealth at $20 million. All from offering to help victims of financial distress. MyBudget manages their income and takes responsibility for paying their debts, deducting what Tammy May describes as "small fees" - an admin' fee of around $2,000 a year, plus a substantial establishment fee.

TAMMY MAY: It can be anywhere from $600 to $1,500. In fact, a lot of the time, people are telling us, our clients are telling us, that they don't even recognise the fees.

GREG HOY: Some say the fees are higher. MyBudget's ads, however, boast of many happy customers.

CUSTOMER (MyBudget Ad): And I live every day knowing that I'm not going to get those phone calls.

TAMMY MAY (MyBudget Ad): The most frustrating part was there was nowhere I could send them for help. So I decided to help them myself.

GREG HOY: Rather than help them, however, customers who spoke to 7.30 say MyBudget only made matters worse, charging high fees while mismanaging debt repayments.

KRYSTAL LAFFIN: First couple of weeks was OK. But then things started getting defaulted without telling me - I wasn't getting told about payments not being made. It just got such a big mess, like, it just turned into drama after drama, phone call after phone call. It got to the point where I couldn't open my letters, I couldn't even answer the phone, I didn't even want to leave my house. I ended up getting mentally ill because of it. ... And MyBudget was still demanding their fees when I was in a mental hospital.

GREG HOY: In desperation, Krystal Laffin sought help from the Salvation Army.

NICOLE BARBER, FINANCIAL COUNSELLOR, SALVATION ARMY: She had lost her insurance for both the car and the home, which were under finance. She had been disconnected from her phone. She had credit card debts. And she was just in tears.

GREG HOY: In Queensland's Hervey Bay, John Woodward and his family were also attracted by MyBudget's ads.

JOHN WOODWARD: And they basically turned around and said, "You won't have to worry about any of this anymore. We'll look after it. Everything'll be fantastic."

GREG HOY: Like Krystal Laffin, MyBudget's service fees were deducted, he says, but MyBudget neglected to renegotiate with or pay key creditors. The Woodwards soon got a frightening call from the bank.

JOHN WOODWARD: I got a phone call from them saying, "What's going on?" And I was in shock, I'm like, "Haven't you been talking to MyBudget? Has MyBudget not been contacting you about what's going on?" And he's going, "No, I haven't heard anything. We haven't received any money. We - you know, they haven't even contacted us." And I was flabbergasted.

GREG HOY: The Woodwards' house had to be sold at a fire-sale price and a big loss.

JOHN WOODWARD: Their care factor, they had none. I broke down at work, collapsed at work. I split up with my wife for about a month.

GREG HOY: Well they say that you ensure that you get paid, but very often creditors don't and the victims can end up in a worse predicament.

TAMMY MAY: We've helped over 30,000 Australians countrywide, and if that was the case, then we wouldn't have a very good business and we wouldn't have clients coming to us month on month and have this growing business of - that's growing at more than 50 per cent per annum.

GREG HOY: There is somewhere else for people struggling with crippling debt to go. Australia's Financial Counsellors Network provides help for free, with support from charities, churches and governments.

FIONA GUTHRIE, EXEC. DIR., FINANCIAL COUNSELLING AUST.: There is something like 2.5 million Australians living in households of high financial stress. And that's an enormous number of people. And that's why you see mass marketing to this group of people.

GREG HOY: Fiona Guthrie, executive director of Financial Counselling Australia, is concerned about the growing for-profit debt counselling market represented by services like MyBudget.

FIONA GUTHRIE: We are really worried about for-profit providers targeting people in financial difficulty who only offer one solution, a solution that involves high fees, high set-up costs, ongoing fees.

ALEXANDRA KELLY, CONSUMER CREDIT LEGAL CENTRE: They always prioritise the payment to themselves first and the payment to the creditors are largely left to be sort of fought amongst those creditors. And I think there's a great deal of self-interest in these organisations and they're in effect profiteering off people's hardship.

GREG HOY: Some say you just profiteer off those in financial distress. Does that worry you?

TAMMY MAY: It doesn't necessarily worry me because I know what we do improves our clients' financial position, and actually, the amount of clients that I hear tell me that MyBudget has saved their life, helped improve their financial position, let alone save their marriage, is so encouraging.

JOHN WOODWARD: I was scared, to be honest, and I was worried. The main thing I had, I wanted to save my family and my house, you know, and that was my biggest concern, and in the end, I lost it anyway.

FIONA GUTHRIE: We are seeing more problems from these services when they don't work. I think the case for regulation is increasingly strong. So something goes wrong, for example, people would have access to external dispute resolution and potentially a mechanism for compensation.

GREG HOY: But some former customers believe that is not enough.

KRYSTAL LAFFIN: MyBudget, I want them closed down.

JOHN WOODWARD: I really believe that they should be made liable for what they've done, and be stopped, pretty much.

GREG HOY: The heavy advertising of happy customers continues. But John Woodward says what eventually saved his family was free advice from a professionally trained financial counsellor.

JOHN WOODWARD: She was the only one that asked for nothing, OK, and done more for me than all of the others put together.

GREG HOY: The concern is that people get drawn in with big promises and then you milk heavy fees out of those who can least afford it. Do you?

TAMMY MAY: Oh, that's absolutely not the case at all because we make sure our fees are affordable for our clients. And the other thing is they're not locked into a long-term contract. They can give us 30 days' notice and actually leave us if the service wasn't working.

FIONA GUTHRIE: If you're in financial difficulty, the last thing that should happen to you, if you go to one of these services, you end up worse off and owing more money. And we - we, unfortunately, see that happening to people.

LEIGH SALES: Greg Hoy reporting. And if you are facing financial problems, you can contact Financial Counselling Australia on 1800 007 007.