Ba-zing,
carbs aren't a good thing to fill up on when you're trying to lose fat. carbs, fat, protein..they are all calories...but carbs are the body's primary fuel source.
You want to replace some carbs with protein, gram for gram, since 1g of either contains 4calories.
The idea is you lower carbs to a low intake (not exactly Atkins low though) and get your calories from protein. Eat enough carbs to keep the body healthy, I would go no lower than 100g of carbs on a daily basis. That's enough to keep the brain working right, and maintain decent energy levels.
Then the body is forced to turn to stored fat to gain the energy needed for your workouts. This of course assumes you are eating approx. 500calories less than your maintenance needs.