We've all seen the commercials on TV:

"Call the debt relief hotline right now," they say.

Advertisements promising to relieve your debt-- some even featuring President Obama as a spokesman.

"It is critical when people hear these ads-- you know, are you in debt? Are you in trouble?-- that citizens understand the difference between those who are doing it legitimately and those who are not," says Governor Jennifer Granholm.

Governor Granholm and the Office of Financial Insurance Regulation are warning people that companies using the term "debt settlement" could be more harmful than helpful.

"Many of them tell you to stop paying your bills, instead pay into an account, and then they take thousands of dollars in upfront fees," says Ken Ross, OFIR Commissioner.

Then, Ross says, while you wait for them to work with your lenders, your debt keeps adding up.

"Creditors many times file lawsuits against consumers, credit scores get trashed and they get ceaseless calls from bill collectors," he says.

There are no regulations on debt settlement companies, which make them hard to prosecute or monitor. However, "debt management" companies like Michigan-based Green Path are heavily regulated and may provide a safer way to manage debt.

"It does sound like the same thing, but we assess the consumer's situation, we give them recommendations as to alternatives to pay debt, and if appropriate, set up a debt replacement plan," says Green Path CEO Jana McNamara. McNamara also says her not-for-profit company helps educate people on how to be better spenders.

In the meantime, the Governor is drafting legislation that would start to regulate debt settlement companies, so that in this already difficult economic time, you don't have another challenge on your hands.

If you think you're being scammed by one of these companies, call OFIR toll-free at 1-877-999-6442.