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Mellody Hobson talks about debt consolidation.

You know those commercials you see that say they help you “get of debt the quick and easy way?” Debt consolidation companies can paint a very rosy picture for people who are struggling to get out of debt. And between credit cards, medical bills, and household expenses, that applies to a lot of Americans. We are addicted to credit. In fact, the average household with at least one credit card has nearly $16,000 in credit card debt.

But $16,000 is just the average. Many people are trying to cope with much higher and more overwhelming debt, and consolidation companies take away the stress of managing several credit cards and promise the end of collection calls. A lot of people in financial distress are sick of dodging calls from creditors and are seduced by the idea of “one affordable payment” every month.

Here’s the catch: In essence, debt consolidation is taking out one loan to pay off many others. But you can’t borrow your way out of debt, and the truth is that there simply isn’t a “quick and easy way” to get out of debt.  Yes, debt consolidation companies can sometimes help you pay less each month at a lower interest rate—but that’s because the term of the loan is longer, which means you stay in debt longer. And the longer you stay in debt, the more you pay. These companies are in business, and they’re making money off of people who are already in dire straights.

Is that unethical, even illegal?

It’s a racket! In fact, The National Association of Consumer Bankruptcy Attorneys just issued a consumer alert at a press conference on Wednesday. Studies have found that most people who use debt consolidation services end up more deeply in debt and with worse credit scores than when they started. Although 41 state attorneys general have cited debt settlement companies as a serious problem and some have filed civil suits against them, criminal action is seldom taken. There are even companies falsely claiming to be non-profits. It’s an industry rife with fraud.

So what’s a debtor to do?

I know it’s tempting to just hand over your credit problems to someone else to manage, but when you consolidate debt, you’re treating the symptom, not the problem. You need to manage debt, not compound it. It’s best to settle your debts yourself. Reign in your spending and start saving. Then call each credit card company you owe, starting with the card with the highest interest rate, and try to negotiate a lump sum payment. You’ll need 25 percent to 70 percent of the total. Be sure to get a written statement from the credit card company that this is what they are accepting. If you need help, turn to credit counseling, not debt consolidation. To find a government-approved credit counseling service in your state, go to the Department of Justice’s website.

What’s the difference between debt consolidation and debt settlement?

As I said, debt consolidation is lumping all your debts into one new loan. You don’t owe your original creditors and you might pay a lower interest rate, but you’ll be paying it off over a longer period of time. Also, you might be required to secure the loan with collateral and could risk losing your home or your car.

Debt settlement is when you or a credit counselor negotiate with your creditors and offer to pay a lump sum that is somewhat less than the total amount you owe. Keep in mind you may face taxes on the amount the creditor has forgiven and your credit score may take a hit.

In both cases, of course there are some legitimate companies, but even the legitimate ones are in business to make money off of people who are already in debt.  If you find yourself in a financial hole, the first thing you need to do is stop digging. The credit card industry was built on the allure of “buy now, pay later.” Unfortunately, the only way out of debt is to start paying it off. Now.