First stop stressing yourself out. They don’t throw people in prison for not paying bills these days unless it is child support. You need to accept and learn to deal with that fact that you can’t keep this up.
Second you need a budget. Budget for rent and minimal food and hygiene and electric and gas, water and garbage and one phone either prepaid cell or a land line(notice NO cable TV), childcare. Once you have those figures then you need to choice whether a car is a need or a convenience and budget accordingly for bus or public transportation or your car. Now add $50 emergency fund per household member and deduct that from your take home pay. What you have left you will put toward paying your credit cards. From today on you will pay yourself first.
Next inventory your assets. Look for anything you can sell. Have a garage sale or use eBay and Craig’s list. Put all proceeds from your asset sells in a savings account. You will use this money as an emergency fund. If you have over $500 then you can use that as a negotiating tool with your creditors. Do not think of credit cards as usable in an emergency. Fund your emergency fund first so you don’t do that. Most people fail and go back to credit cards because they don’t fund an emergency fund. This is not to buy milk or eggs at the end of the month it is to buy antibiotics or pay for something unanticipated that you can’t live without. When I say live I mean physically not emotionally. You use money to meet your physical needs only.
At this point your have cut up all your cards and you won’t use a single one ever again. You have a list of your creditor with the contact information and the amount owed and the minimum payment and the interest rate.
Now let say you have about 50% of what you need to make minimal payments on all your cards. First don’t pay anything until you have your $500 emergency fund. Then pay those who will work with you.
Ignore the rest until they start moving toward you. Make your you get the name and or id of everyone you talk to. Have a pad a paper by every phone. Record the date and the time, person and mailing address and what was said. Don’t give any answers. Tell them you will call them back after talking to your counsel. This is for incoming calls and out going calls. You have a right to end any phone call at any time. Get everything in writing. Say, “When I see this in writing then I can give you an answer”. Don’t accept or give verbal commitments.
You will need to negotiate lower payments. This could take a few months of repeated calls. The best way to lower your payments is to lower the interest. There are many good books out I would suggest you go to your public library and see what they have available. There is loads of information on re negotiate debt and the subject to large to cover here. You also need to arm yourself to deal with collection calls either from your creditors or agency’s that have bought your debt. Looks at previous post and get off all mailing list and phone list for Credit Offers and other sales temptations. Contact all catalog companies that send you catalogs and ask to be removed from their mailing list. Don’t bring them into the house. Stop watching TV as the marketing makes it very hard to stay the course. Stay out of super center type stores. They may have lower prices but they have way too much stuff you don’t need. Shop in the stores that have just what you need.
What ever you do STOP using credit. Don’t Use credit to allow yourself to make your payments. This is a trap and you need to get out of it. It has not worked for you in the past so it is time to change.
Books to read at least once:
Scott Bilker – Talk Your Way Out of Credit Card Debt
HOW TO SETTLE YOUR DEBTS, by Norman H. Perlmutter
Dana A. Neal – BestCredit