ATLANTA, Georgia (CNN) -- Have you seen those ads being run by the debt-settlement outfits on bad late-night TV? Their promise is always the same -- to reduce your credit card debt to just pennies on the dollar without making you file for bankruptcy!



Clark Howard says debt-settlement firms promise to help consumers lower their debts.



Are they for real?



It turns out that promise is just an illusion. Most debt-settlement outfits require you to pay an upfront fee, plus a monthly retainer. Their strategy is to get you to stop paying on your bills. They typically have you take the money you would have paid toward monthly minimums and stash it in savings.



The basic idea is to make the credit card companies so desperate that they'll settle with you. This may end up being the end result, in some cases. However, along the way your credit suffers greatly.



In fact, complaints about debt-settlement firms have increased dramatically in North Carolina, Florida and Oregon, according to The New York Times.  Watch how Clark helped a caller pay off a massive debt »



Many people wonder why these companies even exist. That goes back to 2005, when the bankruptcy laws changed in our nation. At that time, the giant banks that control the credit card portfolios stopped being cooperative with affiliates of the National Foundation for Credit Counseling (NFCC), which helps consumers manage and eliminate their debt.



The banks were cynically trying to force people into a position where they had no choice other than to pay up. That environment created an opportunity for the debt-settlement firms to pop up with their false promises that they alone knew how to defeat the banks.



The irony here is that the banks have now agreed to work with the NFCC again. There's an initiative known as "Call to Action" that is essentially a 60-month payment plan. Its aim is to help consumers who are struggling with credit card debt avoid bankruptcy.



Under the Call to Action initiative, the 10 largest credit issuers have agreed to modify the terms and conditions of their repayment policies. That means they may waive late and over-the-limit fees, in addition to reducing interest rates.



In industry terms, this kind of arrangement is known as a hardship debt-management plan.



The goal here is to increase the chance that you'll pay off your debt instead of bankrupting out of it. But you've got to know that the lenders have not agreed to a reduction of your outstanding balance.



Participating credit card issuers include American Express, Bank of America, Capital One, Chase Card Services, Citi, Discover Financial Services, GE Money, HSBC Card Services, U.S. Bank and Wells Fargo Card Services.



Keep in mind that not everyone will be eligible to participate in Call to Action. Visit NFCC.org or call 800-388-2227 for more details to see if you qualify.
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