If you’re feeling overwhelmed by debt -- credit cards, medical bills, mortgage payments, etc.-- and especially if you’re being hounded by collection companies, your best option is to make an appointment with a nonprofit credit counseling service. In exchange for agreeing to a budget plan, they’ll contact creditors for you and hopefully buy you more time to pay your bills.

Warning! As I wrote in a previous column, due to the number of for-profit scammers out there, look for an organization affiliated with the National Foundation for Credit Counseling (nfcc.org).

Don’t expect a miracle. “Counseling isn’t for everyone,” says Travis Plunkett with the Consumer Federation of America. He says that while a credit counseling agency “can provide some breathing room” by negotiating reduced payments with your creditors, “if you’re really in serious financial trouble, they can’t provide enough breathing room to help.”

Both Plunkett and Gerri Detweiler, author of several books on consumer credit, say that if your situation is especially dire, filing for bankruptcy may be your only recourse. If you think you might be headed down that path, she recommends making an appointment with a bankruptcy attorney as soon as possible.

While a bankruptcy filing is public record and remains on your credit history for 10 years, attorney Stephen Elias says it may not be as painful as you think -- especially if most of your debt is unsecured, i.e. not backed by a tangible asset such as real estate or a car that can be seized. He points out that if you’ve already missed several payments, “your credit is in the tank, anyway, and that stays on your record for seven years.”

Elias, who has authored several file-your-own-bankruptcy books, describes it as an “amazing” process. He says, “First you have to file your papers. Thirty days later you go to a creditors meeting and under oath swear that your paperwork is correct. A minute later you walk out.”

Creditors then have 60 days to object to having your debt erased. But according to Elias, in his 25 years of practice, he’s never seen a creditor do this. He recalls one extreme case where clients had traveled the world, running up a $50,000 bill on their Bank of America credit card. Although he expected B of A to object, there was “not a peep. I was really surprised.”

If the court doesn’t hear from your creditors within the 60-day window, your debts are discharged.

Surprisingly, seniors are often more creditor-proof than younger debtors, especially if they don’t own their home or many tangible assets. That’s because much, if not all, of their income cannot be seized in bankruptcy. Even after it’s in your bank account, Social Security is strictly off-limits, says Elias. So are your company retirement plan, IRA, and pension. There’s also a chance that the income from these accounts is exempt. And, under the Fair Debt Collections Practices Act, anyone can demand that creditors stop harassing them.

But what if you’re middle-aged, have a couple of kids, a mortgage, health problems that have kept one spouse from working, and $30,000 in credit card and medical bills you can’t afford to pay?

Under the revised bankruptcy regulations enacted in 2005, if your income exceeds a certain threshold (set by each state), you cannot qualify for Chapter 7 bankruptcy, which allows you to essentially walk away from your debts. Your only option is to file under Chapter 13, where the court creates a five-year plan for you to pay back a portion of your debts.

But Chapter 13 can be a much better solution for many people, especially if you own a home and want to keep it. Instead of foreclosure, the court allows you to make up the mortgage payments you missed by adding a little extra to each payment left on your schedule.

Elias, who has just written “The Foreclosure Survival Guide,” says an option under Chapter 13 will allow you to keep your house while having your unsecured debt wiped out. He calls the “zero percent plan” the best choice “for most people who went way over on credit card or medical debt.”

Keep in mind that regardless which type of bankruptcy you file, you must complete a credit counseling course given by a federally-approved organization. And your bankruptcy filing will remain on your record for 10 years. That means you will find it next-to-impossible to get a loan. “Sure, they don’t have access to credit,” says Elias, “but that’s not necessarily a bad thing for many people.”

If you feel your current financial problems are temporary and you really, really want to hang on to your home, don’t give up. “The challenge is what when you’re under financial stress, it’s harder and harder to make the calls, handle the rejections, and be willing to keep going,” says Detweiler. As she put it, you have to “be a bulldog about it.”

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.