But there are things you can do to prevent yourself from being the next statistic and sad story.

Su Jin Oh and her husband, Charles Kim, have lived in a cramped construction zone for nearly three months after firing a contractor they said took their money and left them in the dust of their Manhattan studio apartment.

 "It's just a mess," laments Su Jin.

"Once we agreed that we'd make these weekly payments, that must have opened a big door for them and they said we got ourselves a couple of suckers," Kim added.

One functioning sink, a non-existent kitchen -- they lost $27,000, nearly their entire construction budget, after paying thousands of dollars each week to a Westchester contractor.

"The threat was if we didn't make that payment the work was going to stop," Kim said.

Thousands of couples like the Kims are jilted every year by contractors in the New York-New Jersey area. Contractors are supposed to be licensed by the state, held accountable by background checks and exposed by referencing. But all too often, they operate virtually unsupervised by the states that license them. Kate Ashford of Money Magazine said homeowners must do their own homework and watch for warning signs.

"The red flag is when you are paying for things and nothing is actually getting done," Ashford said.

Bob DiBiase found himself in a similar situation.

"I'm going through that nightmare now," DiBiase said.

He hired a contractor who started a $270,000 job on a Tom's River house, only to be fired by DiBiase after more than $150,000 in payments. Why?

"They weren't showing up," DiBiase said. "Materials weren't being delivered."

Contractor Frank Cusano listed the homeowner as his own contractor on a permit, failed inspection after inspection, and DiBiase said much of the work that was done by Cusano's subcontractors needed to be re-done by truly licensed professionals. DiBiase pointed out the costs.

"I had to go into the pension funds, to re-mortgage the house and come up with the money to finish the project," DiBiase said.

He is trying to recoup with a lawsuit, but contractor Cusano said he's filing a counterclaim for $50,000 for unpaid work.

"You shouldn't pay for anything until you've had a code inspector have a look at your house," Ashford said.

That's something Michelle Nesbihal tried to do, but when she called for an inspection of Cusano's work, it failed.

"He just left my family and myself in a mess," Nesbihal said. "I didn't have my furnace, my fireplace, my mechanicals."

Cusano shot down her accusations.

"These are false claims, as they try to get out of making payments," Cusano said. " That's what a lot of people do."

Cusano had this problem previously. A lawsuit filed by a third New Jersey couple was decided in their favor for more than $46,000, which Cusano has not paid. The claims supported by a judge that Cusano worked "without obtaining a building permit," and that the work was "severely defective."

Yet Cusano has a clean record with the state Better Business Bureau and New Jersey's Consumer Affairs Department, which issues contractor's licenses.

"License is just a matter of sending out a fee," Ashford concluded.

Remember, references are essential. Tell potential contractors you need to visit a working job site -- then get references only from projects completed within the last six months, so they can't cherry pick their best work.

And you must start with a thorough contract. Here are some tips:

• Pay as you go.
• Put down either 10 percent or $1,000, whichever is
• Make payments as work is completed, and inspections have been satisfactorily executed, For example, pay another 10 percent when demo is done, 20 percent when plumbing and electrical pass inspection, 20 percent once sheetrock is completed.
• Create a "schedule" of payments that you feel comfortable with, making sure to hold back 10 percent until the "punch list" is finished. And request a lien waiver from all suppliers before you pay that final 10 percent. That way, no supplier can attach a lien to your home if they are not paid by your contractor for materials received.
• Make sure you are named on the Certificate of Liability held by your contractor. Request a copy of his, as well as all subcontractors. Then call the insurance agency to make sure the insurance has not been cancelled.

Before talking to any contractors the first thing to do is create a budget for the project. Without a budget you will be flying blind and may end up over spending. Having a tight budget will also help you make decisions about what kind of fixtures, and materials to purchase. Most products have a wide price range and having a budget will help keep you in line when making buying decisions.

After you have your budget dialed in get three written estimates from three different contractors. Be sure the estimate is complete; getting a written estimate on the back of a business card is not a sign of a good contractor. Getting three estimates will enable you to compare prices from different contractors. Reliableremodeler.com is a great service that will help you get free estimates from quality contractors for free.

Take the time to talk with each contractor and get a feel for which one you will be most comfortable working with and having in your home. Be sure and pay attention to things like who shows up on time and who is prepared to talk about your project. If a contractor shows up late to your appointment chances are they will show up late when working on your project.

While you are in the process of selecting a contractor it is a good idea to make sure they have the proper license, insurance, and bonding. All three of these items are in place to protect homeowners. Working with a contractor who isn't licensed or doesn't have the proper insurance might come back to haunt you. A good contractor will show you copies of these documents when they present your written estimate.

The next step is to check the references of the contractor you are leaning towards selecting. Be sure to ask specific questions about their experience with the contractor. "Did the contractor show up on time?" "Did the contractor clean up after themselves?" If you want to be more aggressive you can ask the contractor for the names and numbers of their last three jobs and call those instead of their handpicked references. This will provide a more realistic overview of the contractors daily work habits and skills.

The last step is to select your contractor and have them provide you a timeline for the completion of the project. Having a timeline will help ensure your project is completed in a timely manner.