If the house is already in foreclusure you might be too far down the road, but credit counseling services can help. They will negotiate with creditors to consolidate and lower payments. American Consumer Credit Counsleing is reputable. Be careful, there's some "counseling" agencies that are sharks waiting to bleed the last drops from you.

I would be happy to lend some advice, but I need a bit more info. 1) What are your current monthly living expenses? (rent, car, utilities, groceries, child support, etc.)

2) What kind of car do you have? (Make, model, year, mileage) And, how much do you still owe on it?

3) Do you have any credit card debt? If so, how much of a balance do you have, and what is your interest rate?

Another thing to consider is that sometime bankruptcy actually makes sense financially. You have to objectively weigh all the pros and cons. Unfortunately, the stress of the situation makes that hard. Also, Congress was kind enough to pass and Bush blind enough to sign into law some consumer unfriendly changes to bankruptcy laws. So if you're in America, get as much info as possible.

Despite what everyone would have you believe, bankruptcy is sometimes a good option. I filed bankruptcy about a year ago and even though it can be time consuming there are plenty of resources on the internet to help you make the right decision.

The things a bankruptcy will not relieve your from are student loans and child support. If you file bankruptcy you either have the option of relinquishing the car and being free of the debt or reaffirming the debt with the current terms. Seeing you do not make over a certain amount, you can probably file for chapter 7 bankruptcy (liquidation) if you're renting or if your estate is not valued over something like $120,000

If you have terrible credit a bankruptcy can actually help your credit. It helped mine. The best thing to do in a bankruptcy is STAY AWAY FROM LAWYERS!! They will charge you $1,500 and can do virtually nothing for you (YOU have to do most of the work). Instead gather up copies of all the bills and debts you owe and wish to be relinquished from then use a forms preparation service to provide you with the necessary forms for bankruptcy. The service we used was called Bridgeport Bankruptcy (bridgeportbankruptcy.com) and it was $150 or so

With new bankruptcy laws you are required to take 2 credit counseling courses. One before you file, and one after you file. They are approximately $30 each and you can do them online in about 2 hours (each). Court filing fees are generally $300-$400 depending on your area. There is a wealth of information all over the internet for bankruptcy.

By the way I am not a lawyer or a financial advisor, I just have personal experience in this arena

AMP - Actually, I think your car is a problem. High-interest debt is never a good thing to have, whether it's a car loan or credit card debt. Financial planners will always tell you that your high-interest debt is the first thing to unload. First of all, kudos to you for not having any credit card debt. That makes things easier.

Question - is your car the only way you can get around? I don't know where you live or what you do, so I don't know what your commuting options are.

If you can live without the car, sell it. You said you owe $8,500 on it. That complicates things a little, because ideally you don't want to sell it for less than you owe. Go to www.kbb.com and click on "Used Car Values". Enter all the information about your car and then click on "Private Party Value". This well tell you approximately what you should be able to sell your car for if you place an ad in the paper. I don't know what your monthly payment is, but if you sell your car at a loss, try to keep the loss to the equivalent of no more than 3 to 4 montly payments. For example, if your payment is $300 per month, and you sell the car for $900-$1200 less than you owe, the bad news in the short term is that you still have 3-4 payments to make on a car you don't own. But the good news is that 3-4 months down the road, that monthly payment is gone. It's all about freeing up your cash flow. Also - check your purchase documents to make sure there's no early payment penalty on your loan.

You could ask for a lower interest rate, but your rate strongly correlates to your credit score. And I would guess you're paying the rate you are because your credit score wasn't great when you purchased the vehicle.

Here's another option, if you really need a car to go about your daily life and/or the loss you'll have to take on your existing car is more than you're willing to take: Do you have any friends or family who would be willing to loan you some money a low or zero interest rate? If so, check out: https://www.circlelending.com/handshakeplus/index.asp?

Circle Lending is a bank that specializes in the lending of money between friends and family. For a flat fee of $99, they'll document the loan, set up the payment schedule, etc. So that way the person lending you the money has documentation of it and something to hold you to. Then you won't end up on Judge Judy or anything like that.

If you have to sell the car at a loss of, say, $2,000, and you can get a decent used car for, say, $3,000, then if someone can loan you $5,000 to cover both your loss (which you'll have to pay to the financer of your current car) and the cost of the used car, then you will have swapped $8,500 in high-interest debt for $5,000 in low interest debt. That knocks down your total debt amount and your montly payment.

Next - your thought about bankruptcy is correct. It should be your last option. If your credit is already "destroyed", then bankruptcy will make it worse. You should start thinking about rebuilding your credit score. First, order a copy of your credit report from each of the three major reporting bureaus: Experian, TransUnion and Equifax (you can Google them to find their sites). I think you can request your report online from all three, and they should display immediately assuming you entered all of your personal information correctly. If you have a problem, you can always call their customer service line. Anyway, federal law says they have to give you one free copy per year for your review. The don't have to tell you your score (they'll try to charge you for that - don't worry about the score, just tell them you want the free report).

Review your credit reports to see if there are any errors (credit cards or loans you never had, etc.). If there are errors, report them in writing.

Here are some other things you can do to boost your credit score:

http://ezinearticles.com/?10-Ways-To-Boost-Your-Credit-Score&id=6256

And here's a more detailed article on "secured credit cards":

http://www.allbusiness.com/4085002-1.html

In terms of debt advice management, check out this site for reputable credit counselors:

http://www.nfcc.org/

On the income side, you definitely need a better paying job. How does your resume look? I'd be happy to glance at it (I have an MBA with 10 years of experience in finance and human resources, so I could give you some advice).

Hope this helps.

1) Ski mask

2) Duffel bag

3) Shotgun

4) Walk into bank

5) ???

6) Profit 

There's always the dreaded extra-income weekend job, too.  I don't know about New Mexico, but around here an honest, hard-working person can make $15+ an hour for cleaning houses.  I know a couple of guys that saved for their house down payment that way.

Have you thought about taking some (free) community school tech classes that might help with an upgrade on the job?  Or even buying a book or two to get some computer skills?

Plus, if something goes wrong, you end up with free housing.