Have you seen ads being run by the debt-settlement outfits on late-night TV? They promise to reduce your credit card debt to just pennies on the dollar without making you file for bankruptcy.

But that promise is an illusion. Here's the scoop: You usually pay an upfront fee to the debt-settlement firm, 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 on monthly minimums and stash it in a savings account.

The basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you just wind up damaging your credit.

In fact, complaints about debt-settlement firms have doubled in North Carolina; tripled in Florida; and quadrupled in Oregon, according to The New York Times.

The reason these companies even exist goes back to 2005 when the bankruptcy laws changed in our nation. At that point, the banks stopped being cooperative with affiliates of the National Foundation for Credit Counseling (NFCC). They were cynically trying to force people into a position where they had no choice other than to pay up. The debt-settlement firms then popped up promising they knew how to defeat the banks.

The irony here is that the banks have now agreed to work with the NFCC again. A newly announced debt-management initiative offers reduced interest rates and the possibility to waive your late fees.