Thanks for the detail. Obviously, the trouble is that you expect that you'll make ends meet trying to support two adults and a baby on one part-time income. Even if you call the creditors to plead that you can only make tiny payments or if you try to declare bankruptcy and ask the judge to have pity on you, because of your current work situation it isn't going to go over big. The truth is, you're simply not working enough.

First ... you have so little income, apply for welfare. Even if you don't qualify for cash assistance, you might qualify for daycare assistance, medical coverage and WIC. Yes, they will give you a hard time because you're married. That might even lock you out of getting some benefits, but you MUST try. I pretty sure you qualify for WIC.

While it really bites to leave your baby in daycare, you and your husband must work more. Can Grandma watch the baby evenings and weekends while you pick-up a couple of odd shifts? If you're having trouble finding work, sign up with every temporary job placement company in the phonebook. A judge will look at you with a very jaded eye if you try to tell him/her that two adults with college under their belts can't find ANY job.

Sorry, but to eliminate debt, there really are only two roads - work more or spend less. Sounds like you need to work more.

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"I've been rich and I've been poor but independently wealthy is where it is at."

I didn't really explain our current situation, just our past situation. Dh does work full time now (and has been since Dec, which allowed us to save up a little bit of money we would have had more if we hadn't spent so much on our son before he was born). He is also looking at getting a second job which is required before we move out of my parents house. We tried welfare (there isn't really such a thing in MN, its a work program) but we make a couple hundred too much a month which means we don't qualify for any of the programs. I am already on WIC and myself and baby have medical insurance.

Right now we make enough to pay all of our bills and have a small amount left over. We need to be making a little more to survive living outside of my parents house which is why he is getting a second job. Neither of us have completed degrees and it's not that easy to find jobs in our area right now. The job placement is a good idea and I will have my Dh look into which ones are in our area. We just need to be careful that he doesn't get something that interferes with the job he has now, because we can't afford to lose it.

This sounds defensive, but I'm not trying to be. You're only trying to help and all of your suggestions are both helpful and true. We have started to implement them already.

I put a reserve on the Total Money Makeover and look forward to reading it. We recently sat down and looked realistically at our expenses and realized just how much the little stuff adds up. We have since went on a spending freeze (thanks to this website) and are only spending money on bills, groceries, and diapers. A lot of the reason we are in this mess is because of our excess spending and impulse buying. I especially need to break that habit.

Bankruptcy is scary to me and I was hoping we could figure out a solution instead of going that route. Though you all may that it may have already gotten to this point.

I will look at getting a forbearance on my student loans. Those especially worry me but I just can't go back to school right now.

I will have to talk to a CPA then if we try to settle. Our debt by far out paces our assets but that may not have an effect. I am curious about the 1099 though. I have settled one debt in the recent past (my grandmother paid it for me) for a lot less than what it was and they never sent a 1099. A part of me was always worried that they weren't a legit company but that debt is off my credit report so I guess they were. However I never got a 1099(didn't know I needed one) and so I didn't claim it on my taxes last year. Now I'm a little worried about that. Is there something I should do to amend my taxes?

Thank you for everyone's replies. It gives us a lot to think about and gives a direction I should start taking to get started, which is what I was looking for.