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 .
Most debt - settlement companies require you to pay an upfront fee , plus a monthly retainer . Complaints about these companies have increased in many states . ` ` Call to Action '' aims to help consumers with credit card debt and bankruptcy .