What should I do? I am now on welfare. I have applied for temporary and permanent Disability. I owe back Taxes, student loans, consumer debt and medical debt. I have tried some to talk to the creditors but they refuse to be even somewhat realistic. The total debt burden is maybe $130,000. My salary last year was $ 13,000. My wifes was $6,000. That was before my disability. I have not been able to work since January. I really don't like the idea of bankruptcy. This is why. The student loans are federally insured. This means that they should be discharged upon my designation of permanent disability. Also, they should be taken off the credit report I believe. This is a large portion of what I own. The other big area is taxes. I have filed the returns well over the 3 year limit before now. They could be discharged in bankruptcy but the IRS has already declared them noncollectable even though they have a tax lien. These can be discharged in bankruptcy but I feel given all the above the IRS would settle for a fairly low number. Any idea what they might accept? The others are all small nuisance debts and recent medical bills. I would think these could be settled as well. When a creditor would see the income, no assets, welfare letter, list of medical expenses not covered by insurance last year($14,000) etc, I just can't see how this couldn't be settled at a very low number so I could at least get my financial life clean which wouldn't be the case with a bankruptcy. Any thoughts?

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State/Country relating to question: New Jersey