I feel completely overwhelmed by my debts and don't know where to begin. What should I do?

Take a deep breath and realize that for the most part, your creditors want to help you. Whether you're behind on your bills or are afraid of getting behind, call your creditors. Let them know what's going on--job loss, divorce, medical problem or other troubles--and ask for help. Suggest possible solutions such as a temporary reduction of your payments, skipping a few payments and tacking them on at the end of a loan, skipping a few payments and paying them off over a few months, dropping late fees and other charges or even rewriting a loan. If you need help negotiating with your creditors, consider contacting a non-profit debt counseling organization, such as Debt Counselors of America (http://www.dca.org) or a local Consumer Credit Counseling Service office.

I'm afraid I might miss a car payment. Should I just let the lender repossess?

No. Before your car payment is due, call the lender and ask for extra time. If you're at least a few months into the loan and haven't missed any payments, the lender will probably let you miss one or two months' payments and tack them on at the end. If you don't pay or make arrangements with the lender, the lender can repossess without warning, although many will warn you to give you a chance to pay what's due.

If your car is repossessed, you can get it back by paying the entire balance due and the cost of repossession or, in somecases, by paying the cost of the repossession and the missed payments, and then making payments under your contract. If you don't get the car back, the lender will sell it at an auction for far less than it's worth. You'll owe the lender the difference between the balance of your loan and what the sale brings in. The amount is usually in the thousands.

This varies from state to state and lender to lender, but most lenders don't start foreclosure proceedings until you've missed four or five payments. Before taking back your house, a lender would rather rewrite the loan, suspend principal payments for a while (have you pay interest only), reduce your payments or even let you miss a few payments and spread them out over time.

If your loan is owned by one of the giant U.S. government mortgage holders, Fannie Mae or Freddie Mac, foreclosure could come even more slowly. Fannie Mae and Freddie Mac have been working with homeowners to avoid foreclosure when a loan is delinquent.

You're certainly better off selling the house than having it go to foreclosure. If you can find a buyer who will offer to pay at least what you owe your lender, take the offer. If the offer is for less than what you owe your lender, your lender can block the sale. But many lenders will agree to a "shortsale" where the sale brings in less than you owe the lender and the lender agrees to forego the rest. Some lenders require documentation of any financial or medical hardship you are experiencing before agreeing to a short sale.

If you get no offers for your house or the lender won't approve a short sale, you can walk away from your house. Call the lender and ask if it will accept your deed in lieu of foreclosing. If the lender won't, prepare what's called a quitclaim deed you "quit" your interest in the property transferring ownership to your lender. You write "DEED IN LIEU OF FORECLOSURE" in block capital letters across the top of the deed, pay any transfer fee, record the quitclaim deed where you recorded your ownership deed and mail a copy of the recorded quitclaim deed to the lender. This means that you no longer own the house.

My utility bill was huge because of a very cold winter. Do I have to pay it all at once?

Maybe not. Many utility companies offer customers an amortization program. This means that if your bills are higher in certain months than others, the company averages your yearly bills so you can spread out the large bills. Also, if you are elderly, disabled or low income, you may be eligible for reduced rates ask your utility company.

I'm swamped with student loans and can't afford my payments. What can I do to avoid default?

First, know that you're right to do all you can to avoid default, rather than ignoring your loans and hoping they'll just go away. If you default, the amount you owe will probably skyrocket because the government can add a collections fee of up to 25% of the principle.

To avoid default, contact the companies that service your student loans and tell them why you can't make your payments. You may be eligible for a deferment ways of postponing repayment. In very limited circumstances, you may be able to cancel a loan. Also talk to your loan holders about flexible payment options many now offer payments geared to borrowers' incomes.

In addition, consider consolidating your student loans. You can consolidate federal student loans through the government's direct lending program or through a private loan servicing company, such as Sallie Mae or USA Group. With loan consolidation, you can lower your monthly payments by extending your repayment period; you may also be able to lower your interest rate. Most loan consolidators offer flexible repayment options based on your income, and you may be able to consolidate even if one or more of your loans is in default. Types of loans eligible for consolidation, repayment options and interest rates vary slightly from lender to lender. Contact loan servicers for more information:

• Federal Direct Consolidation Loan Center: 800-557-7392, http://www.ed.gov/offices/OPE/DirectLoan/consolid.html
• Sallie Mae: 800-524-9100, http://www.Salliemae.com
• USA Group: 800-382-4506, http://www.usagroup.com.

For the most part, a creditor must sue you, obtain a court judgment and then solicit the help of a sheriff or other law enforcement officer to garnish wages. Even then, the maximum the creditor can take is 25% of your net pay and you can protest that in court if you can't live on only 75% of your wages.

In three situations your wages may be garnished without your being sued:

• The IRS can take everything but about $100 a week.
• The Department of Education or a state guarantee agency can garnish up to 10% of your wages if you're in default on a student loan.
• Up to 50% of your wages can be garnished to pay child support or alimony.

To place a lien on your house or empty your bank account, almost all creditors must first sue you, get a judgment and then use a law enforcement officer. A few creditors, such as an unpaid contractor who worked on your house, can put a lien on your house without suing. And again, the IRS is an exception it can place a lien or empty your bank account without suing first.

Your tax refund can never be taken unless the Treasury Department receives such a request from the IRS, the Department of Education or a child support collection agency.

Can I go to jail for not paying my debts?

Debtor's prisons were eliminated in the U.S. by 1850. In a few unusual situations, however, you could be jailed: you willfully violate a court order, especially an order to pay child support; you are convicted of willfully refusing to pay income taxes; or you are about to conceal yourself or your property to avoid paying a debt for which a creditor has a judgment against you.