As some brought in the new year with cheer, others just see another year of cowering under what appears to be insurmountable debt.

And when you cower, you can become desperate and lose whatever common sense you may have. Otherwise, I can't explain why someone would pay a company nearly $900 or more for the mere promise of helping reduce debt.

One desperate reader from Rochester, N.Y., e-mailed me asking for help in persuading her husband not to pay a Florida debt settlement company an upfront $895 fee. The company promised to help cut the $21,000 they owed in credit card debt. The wife said they began relying on credit cards after her husband lost his job after 24 years.

"My husband was recently contacted on the phone by a company alleging it was a 'debt reduction' organization," she wrote. "They are willing to guarantee a $3,000 reduction or our money back. They have power-of-attorney forms to be notarized. My husband wants to get moving on it. Is this a good idea?"

Debt settlement companies promise to act on your behalf to negotiate with your creditors to reduce your debts. But this is something you can do yourself.

Before I even began to look into the possibility, I suspected working with this particular company wasn't a good idea. There were just too many red flags. I'm not naming the company because I don't want my warnings to be just about this firm, but about the growing practice of debt settlement.

Let's see if you picked up the cautionary signs in my reader's note. To confirm what I spotted, I contacted Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling. Here's what alarmed me: