I'm sorry to hear about your situation.
We can't give legal advice online, only information, so here is some general information for you:
Options to deal with your debts generally include credit counseling, debt settlement
, and bankruptcy.
If you have already looked at credit counseling and that won't work, then you can also try to settle the debts, which is where you negotiate with each creditor and tell them you will send one final lump-sum payment in return for them canceling the rest of the debt. You can often settle for around 40% of the balance or so, as long as you send in the 40% in a lump sum payment. However, if you do not have 40% to pay, then this isn't likely to work. If you can
come up with some cash to settle, then you usually want to get the agreement in writing
before sending any payment, pay them in such a way that you can prove when they were paid (i.e. pay by phone direct from a bank account or something), and be ready for tax consequences since forgiven debt is considered income by the IRS
If credit counseling and settlement won't work, bankruptcy might be a good option for you. Bankruptcy will likely completely wipe out the second mortgage you owe, as well as all your other bills EXCEPT the student loan.
Student loans are NOT discharged by bankruptcy unless you file a special proceeding (called an adversary proceeding) to get them wiped out during your bankruptcy case. Getting student loans wiped out in bankruptcy is difficult and potentially expensive to try. But, if your husband owes the student loans and he can prove he is disabled, he may be one of the rare cases that can actually do it.
I strongly suggest you meet with a bankruptcy attorney in your area. Many attorneys offer free, no-pressure consultations to help you formulate a plan so you don't feel helpless anymore. I see people about bankruptcy every day, and they often come in totally stressed out and unable to see the light at the end of the tunnel, and usually when they leave we have a plan of action to clear most or all of ther debt and their relief is palpable. It is a liberating feeling to know what you have coming in is enough to cover what's going out.
Good luck and if you have any follow up questions, please feel free to ask.
JoeLEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) Joseph Ross. All rights reserved.
Edited by Joseph Ross on 11/1/2009 at 6:28 AM EST