First off, stop and take a breath. Yes, you’re in serious debt. But what’s the worst that can happen? You can get mean phone calls… that’s about it for now. You’re not going to jail. They’re not going to come and break your knees. It’s serious but you’re not alone in this – at all.
Do NOT NOT NOT take the money from your 401K. That money isn’t meant for debt and they can’t take it from you even in a BK.
I think a lot of people on here would say not to use a debt counseling/consolidation company. They’re just going to do the things you can do on your own. And if you’re going to get the nasty phone calls anyway, why would you pay a spiff to someone else?
Are you familiar w/Dave Ramsey? Check out Total Money Makeover from the library. Watch his show if you can. You just need a plan. And the hardest thing for you right now is that you don’t want to be late. You don’t want to not pay people. But that’s the situation. It’s okay. It doesn’t make you a bad person. And there are a lot of people in the same boat with you.
Start by cutting up those credit cards and not charging another thing for any reason. Then write down a budget if you haven’t already. Tracking all your spending for 30 days to see what you can cut out (take it from someone who had no idea how much I was spending on certain things – even when I didn’t have the money).
Once you get this done, you’ll know what you have left over once you take care of your family and your four walls. Pay mortgage/rent, food, utilities, auto first. Everything else falls behind these. And all you can pay them is what you have to pay them. It’s not like you’re tucking money away instead of paying them.
A fair way to organize your debts is to write them all down on a piece of paper and figure out the total you have to pay all of them. Then everyone gets a percentage of that total you have. They won’t like it, but you can fax/mail them your list to show that you’re doing everything you can.
Your situation really sucks. But a lot of us are dealing with similar issues so take heart that you have people behind you.